Have you ever heard of a stock jumping 6,700,000% in a single day? Sounds impossible, right? Well, that’s exactly what happened with Elcid Investments, and I’m here to tell you this fascinating story of trapped value and market mechanics.
The Hidden Gem
Imagine owning a company whose main asset is a treasure chest of Asian Paints shares. That’s Elcid Investments for you. With a 4.3% stake in Asian Paints, each Elcid share represents ownership of about 203 Asian Paints shares. Do the math, and you’ll realize each Elcid share should be worth around ₹6.3 lakhs.
But here’s where it gets interesting.
The Price Prison
For years, Elcid’s stock was trapped in what I call a “price prison.” The jailer? A simple market rule that limited daily price movements to 5%. Think about it: If you owned something worth ₹6.3 lakhs, would you sell it for a few thousand rupees? Of course not! This created a deadlock:
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- Nobody wanted to sell at artificially low prices
- No trades meant the price stayed low
- Low prices meant no trades
- It was a perfect catch-22.
The Great Escape
Enter SEBI, the market regulator, with a solution. In October 2023, they organized a special call auction with no price limits. The result? A mind-boggling 6,700,000% jump in a single day! This wasn’t market manipulation or a bubble – it was simply the market finally being allowed to reflect Elcid’s true value.
The Chess Game
But there’s more to this story. The Vakil family, which owns 75% of Elcid, has been trying to take the company private. Previous attempts failed because nobody could agree on a fair price (how could they, when the market price was so artificial?).
Now, with the price discovery through the special auction, we’re seeing an interesting chess game unfold:
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- The promoters might attempt delisting again
- They have support from Hydra Trading (another 9% shareholder)
- Minority shareholders like myself are willing to consider a fair price (around ₹4-4.5 lakhs per share)
- But we won’t settle for less – why should we give away our shares at a massive discount?
Lessons for Investors
This saga offers fascinating insights into market mechanics:
- Sometimes, rules designed to prevent market manipulation can trap value
- True value eventually finds a way to express itself
- The importance of understanding what you own – Elcid shareholders who understood the underlying value held on despite the artificially low prices
What’s Next?
The story isn’t over. Will the promoters attempt another delisting? Will they offer a fair price? The pressure is on – Asian Paints’ value will likely increase in the coming years, making Elcid even more valuable.
For now, I’ll say this: Elcid’s story reminds me that markets don’t always get it right in the short term. Sometimes, rules and mechanisms trap value. However, patient investors who understand what they own and stick to their convictions eventually see the truth prevail.
Note: This is a complex situation with significant risks. New investors should thoroughly research and understand all aspects before considering any investment.
The Bottom Line
Elcid’s story isn’t just about a stock price jump – it’s about market mechanics, value discovery, and the patience required to see true value recognized. It’s a testament to the fact that sometimes, the market can take a very long time to get the price right, but when it does, the results can be spectacular.
As a minority shareholder, I’m fascinated to see how this story continues to unfold. One thing’s for sure – it’ll be one for the history books.