Intrinsic value Rs 4 lakh, CMP Rs 15, grey market price Rs 85K: Grab this stock if you can (2024)

Most stocks on Dalal Street may be looked overvalued, but there is no dearth of underpriced stocks too! Among them, one is trading at a negligible price compared with its book value.

The current market price of the stock is Rs 14.74 on BSE. But in the unlisted space, where illiquid, delisted and rarest of rare stocks get traded unofficially at a premium, it trades at Rs 82,000-85,000, about 7,00,000 per cent premium to the CMP.

We are talking about a microcap company Elcid Investments. Prima facie, it looks like a dud penny stock, with no investor willing to take a punt on it. The scrip has changed hands only 33 times since October 2016. In 2021, it was last traded on January 28, with a single share being traded.

Data available from BSE showed the company had a total 1,90,150 shares in circulation. As of March quarter, promoters held 1,49,950 equity shares, or 74.98 per cent, stake in Elcid Investment, while 40,200 equity shares, or 25.02 per cent, stake was by public shareholders. The problem is, no one is selling.

“It is a very thinly-traded stock and people only opt for off-market trade. Price of the share is directly linked to the share price of Asian Paints," said Sambhav Aggarwal of Arms Securities, a firm that deals in unlisted shares. "Usually, HNI investors fancy it. We get a lot of queries for the stock. But very few trades take place."

Elcid Investment holds 2.95 per cent stake (2,83,13,860 equity shares) in Asian Paints, valued at over Rs 7,200 crore.

Some analysts assign an intrinsic value of over Rs 3.8-4 lakh to a single share of Elcid Investment. That would mean the current market price is at a three-fourth discount to its intrinsic value or book value.

Sunil Chandak of Gennext Investrade, another dealer in the unlisted market, finds nothing unusual about the hefty premium that Elcid commands. “It is a well-known fact that holding companies trade at huge discounts, and Elcid is not an exception,” he said.

“Elcid is highlighted more because of its extremely low price on the bourses,” Chandak said. “The vast spread of Rs 15,000-20,000 per share between buyer and seller price stalls frequent trades on the counter,” he said.

In FY20219-20, the firm reported Rs 73.18 crore profit on sales of Rs 77.52 crore. It generated net sales of Rs 49.01 crore and profit of Rs 36.79 crore during the quarter ended on December 31, 2020. Its March quarter earnings are still awaited.

On a consolidated basis, Elcid Investment has a book value over Rs 4,00,000 and brags an EPS of Rs 3,153.61 and cash earnings per share (CEPS) of Rs 3,162.31 on a trailing 12-month basis.

Data from BSE showed the diversified commercial services firm has a full market-cap of just Rs 0.29 crore, while the free-float market-cap stands at Rs 0.07 crore.

Vivek Bajaj, Founder of StockEdge, said Sebi and stock exchanges collectively have to look at this issue afresh and amend the current price discovery mechanism, so that trading in these shares can happen at the real value.

“It is a loss for everyone. Investors cannot realise the right price for the stock, and thus they have to rush to the unlisted space,” he said.