If you thought that Madras Rubber Factory Limited (MRF Ltd) stock was the most expensive stock on the Indian market, you were wrong because it has happened recently that a stock surpassed MRF to become the most expensive stock on the Indian market. Shares of tire manufacturing company MRF are trading at Rs 1.20 lakh. And the small-cap company’s shares entered the market at twice the price of MRF. Interestingly, the share price was just Rs 3.21 in July.
The small-cap stock that outperformed MRF stock was Elcid Investment Ltd Share, which re-listed on the BSE on Tuesday, October 29, at Rs 2,25,000, but was up 5% intraday. to Rs 2,36,250, taking its total market capitalization to approximately Rs 4,800 crore.
Notice issued on October 21
A notice issued by the BSE on October 21 said that some investment holding companies will be relisted through a special call auction mechanism to determine Monday’s prices. The effective exchange rate will be settled on Tuesday, October 29, after special terms come into effect. Alcide Investments is one of them. Other companies include Nalwa Sons Investment, TVS Holdings, Kalyani Investment Company, LIC Investment, Maharashtra Scooters, GFL, Haryana Capfin and Pilani Investment and Industries Corporation.
Delisting proposal fails
Promoters of Alcide Investment proposed delisting at a floor price of Rs 1,61,023 per share. To this end, a special recommendation was made. However, this proposal failed due to the lack of a majority of public shareholders.
Why are stocks so expensive?
Alcid Investments, with a share capital of Rs 200,000 Cr, holds 2,83,13,860 shares or 2.95% stake in Asian Paints Ltd, which was valued at approximately Rs 8,500 crore as of last close. This is the only reason why the stock is selling at such a high price on the stock market.
Share price rose from Rs 3-4 to Rs 2.35 lakh in a day
Hitesh Dharawat of Mumbai-based Dharawat Securities said Alcid Investments has become a hot topic on Dalal Street for its stake in Asian Paints. The stock price rose directly to Rs 2.35 lakh from Rs 3-4 a day ago. However, the book value is still higher than the current share price.
The shares have not changed for a long time
Despite being priced at Rs 2.36 lakh per share, the stock is still trading at around 45 per cent lower than the intrinsic share price of Rs 4.25 lakh per share of its Asian Paints stake. The stock had seen little movement in the past few years before 190 shares worth Rs 433 crore were traded on Tuesday.
Investment funds are riskier
Kranthi Bathini, director of equity strategy at Wealthmills Securities, said such companies are in the business of holding shares in other companies to determine share prices for investors. Investing in such companies depends entirely on one’s risk appetite, but it should be remembered that these companies may be subject to liquidity risks.
Must know the way out
He said investors should understand the company’s cash flow and nature of the business before investing. Only investments that suit their risk profile make sense. There may be some value in such companies, but investors should know how to exit such companies to avoid losing money later.
(Note – Always seek help from a financial advisor before investing in any stock.)
