Shares of Elcid Investments, which recently made headlines for a dramatic one-day surge, are back in the spotlight after the release of its financial results for the September quarter.
Financial Highlights
- Revenue: Consolidated revenue rose 143.5% year-on-year (YoY) to ₹56 crore but declined 68.53% sequentially.
- Net Profit: Net profit jumped 168.75% YoY to ₹43 crore but fell 68.38% from ₹136 crore in the June quarter.
The company’s Q2 performance has disappointed investors, leading to a 14.52% drop in its stock price over five sessions since the results were announced on November 12. The stock is now 28% below its recent peak of ₹3,32,399 per share.
Business Model and Risks
Elcid Investments primarily earns revenue from investment activities rather than daily operations, making its income highly dependent on asset price fluctuations. This business model exposes the company to significant market risks.
The stock’s low liquidity is another concern, with an average daily trading volume of just 1,000 shares on both the BSE and NSE. Analysts remain cautious due to these liquidity constraints, which contributed to the stock’s recent volatility.
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Recent Developments
On October 29, Elcid Investments experienced an extraordinary surge of 66,92,535% after its relisting as part of a BSE price discovery initiative. The relisting used a special call auction mechanism to determine the stock’s fair value, targeting investment holding companies.
Elcid Investments, registered as a non-banking financial company (NBFC) with the Reserve Bank of India, reported investment holdings worth over ₹12,450 crore in its FY24 annual report. Despite these assets, the stock continues to trade below its book value of approximately ₹4 lakh due to limited liquidity and trading volumes.
Broader Context
Holding companies like Elcid generally trade at a discount to their book value because they lack active business operations. However, investor interest in such companies has grown since SEBI proposed using special call auctions without price bands in July, aiming to reduce the disparity between market price and book value.
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Disclaimer: Investors are advised to consult certified financial experts before making investment decisions.