Elcid Investments Share : Growth Story of Elcid Investments

Introduction

Elcid Investments Ltd recently surprised the stock market with a sudden price jump. The stock went from a low price of Rs. 3.53 to a mind-blowing Rs. 2,36,000 in a single day, an increase of more than 6 million percent. This major spike happened because of a new rule introduced by SEBI, the government agency that regulates India’s stock markets. Let’s look at why this happened, what Elcid Investments does, and how SEBI’s rule played a role in this price rise.

Why Did SEBI Make a New Rule?

In 2024, SEBI brought in a new rule to help stocks of certain companies, especially investment companies (ICs) and investment holding companies (IHCs), find their real value in the market. ICs and IHCs are companies that mainly invest in other companies or stocks. They don’t sell products or services like most companies do. Instead, they make money through their investments. Many of these companies were trading at prices much lower than their real value, often because they were not very popular or easy to buy and sell.

SEBI wanted to help these companies’ stock prices better reflect their real worth. So, they created a special trading process called a “special call auction with no price limits,” allowing the price to move freely based on demand. This rule helped Elcid Investments’ stock reach a fairer price, leading to that massive one-day price increase.

What is Elcid Investments?

Elcid Investments Ltd is a special type of company called a non-banking financial company (NBFC), which means it doesn’t operate like a regular bank but focuses on managing money through investments. Elcid is also called an “investment company” because it mainly invests in shares, bonds, and other financial assets instead of running a business. It’s registered with the Reserve Bank of India (RBI) as an NBFC, which allows it to manage money in this way.

Elcid has two smaller companies, Murahar Investments & Trading Co Ltd and Suptaswar Investments & Trading Co Ltd, that help with its investment activities. One of Elcid’s main assets is its 4.2% ownership stake in Asian Paints, one of India’s largest paint companies. As of December 2022, this stake in Asian Paints was worth around Rs. 12,664 crores (12,664 billion rupees).

Who Owns Elcid Investments?

Elcid Investments is promoted by the Vakil family, who have been involved in its growth for years. Arvind Vakil, the head of the family, was one of the original founders of Asian Paints back in 1942. Because of their strong connections to Asian Paints, the Vakils continue to hold a large stake in both companies.

Delisting Attempts: Why Elcid Tried to Go Private

De-Listing Attampt 2013

In 2013, the Vakil family wanted to delist Elcid Investments, which means taking it off the stock market and making it a private company. To do this, they offered to buy back shares from the smaller shareholders at Rs. 11,455 per share. However, only a small portion of shareholders agreed to sell their shares at that price, so the delisting attempt failed.

De-Listing Attampt 2022

The family tried again in 2022 with a higher offer of Rs. 1,61,023 per share, but this attempt also did not succeed because enough shareholders did not sell their shares.

SEBI’s Rule on Open Offer to Minorities

According to SEBI’s rules, if a company is listed on the stock market, the promoters (main owners) cannot hold more than 75% of the company’s shares. Since the Vakils owned around 80% of Elcid’s shares, they had to make an open offer to buy some shares from other shareholders and bring down their ownership to 75%. In this open offer, the Vakils offered Rs. 5,000 per share to buy 4.75% of the shares (about 9,500 shares), and many minority shareholders accepted this offer.

The Real Value of Elcid Investments

Even though Elcid’s stake in Asian Paints is worth a lot of money, Elcid’s own shares used to trade at a very low price around Rs. 15 per share. This happened because Elcid’s shares are not very liquid, meaning there aren’t many buyers and sellers in the market, so its market price did not match its real value.

In 2020, some public shareholders asked Bombay High Court to get involved and ask SEBI and the Bombay Stock Exchange (BSE) to set up a fair price discovery method for Elcid. Many shareholders wanted a “call auction,” a method to help set a fair price for shares. SEBI’s new rule finally allowed this, and the special auction helped Elcid’s stock reflect its actual worth in the market.

What Investors Should Know

The rise in Elcid’s stock price to Rs. 2,36,000 shows how important fair price discovery is for certain companies. SEBI’s new rule made it possible for Elcid’s stock to reach a price closer to its actual value, which is rare in the stock market. However, while this price increase may attract attention, potential investors should be cautious and consider whether the stock fits their investment goals.

Summary

Elcid Investments Ltd is a unique investment company with high-value assets like a large stake in Asian Paints. SEBI’s rule change allowed a special auction for the stock, helping it reach a fair market price. While this price jump may seem attractive, investors should understand the nature of Elcid’s business before making any decisions. This case highlights the impact of regulatory changes on the stock market and the importance of knowing a company’s true value.