Widely read:
A single share of Elcid Investments can get you around 113 shares of a large cap like Asian Paints, five years of Netflix, Amazon Prime, and Disney+ subscriptions, four iPhone 15 Pro Max phones, or a brand-new Royal Enfield bike. But chances are you will never be able to own the stock.
"Why am I not able to buy Elcid Investments share?" is the top Google search on the company. It's tough to get your hands on Elcid, quoted at around Rs 2.8 lakh as India's priciest stock because it has a low free float. This means the company's shares freely available for public trading are few. Only 328 shareholders hold Elcid's 2 lakh shares. Of this, the promoter group holds 1.5 lakh shares, leaving only 50,000 available to 322 public shareholders.
Elcid skyrocketed by an astounding 66,92,535 per cent in a single day on October 29 in a special call auction, dominating news headlines since then.
This prompted us to look for similar hidden gems, and we found three such stocks. They not only trade at mouthwatering valuations but also tout steady financials! And yet, they remain practically inaccessible to the market. Find out what makes them so appealing to investors:
Shares like Elcid Investments
1) Taparia Tools
Taparia Tools, a niche tool manufacturing company, stands out with a remarkably low P/E ratio of 0.12 times and a market capitalisation of just Rs 14 crore. Not just that, the company has grown its revenue 12 per cent annually over the last five years. It has also offered an extraordinary dividend yield of over 400 per cent!
The stock, however, sees limited trading activity. Taparia Tools' shares have traded only 1 per cent of the time during their last 497 trading days. With just 904 shareholders, its free float remains minimal, contributing to its illiquidity.
2) Southern Gas
Southern Gas, a specialised manufacturer and supplier of industrial and medical gases, trades at a strikingly low P/E ratio of 0.03 times and a market capitalisation of just Rs 0.05 crore!
Over the past three years, Southern Gas has grown its revenue by 5 per cent annually. It offers an exceptional dividend yield of over 220 per cent, rewarding its limited shareholder base. However, with only 99 shareholders, the stock's free float is exceedingly low, resulting in minimal market liquidity.
3) Apis India
Apis India, an FMCG company known for its honey, jam and dry fruits trades at a P/E ratio of 4.8 times and a P/B ratio of below one with a market capitalisation of Rs 147 crore.
Over the past five years, the company has achieved 5 per cent annual revenue growth and a decent average return on equity and return on capital employed of 9 and 7 per cent, respectively. Notably, its ROE has surged to 19 per cent for 12 months ending September 2024, reflecting improved profitability. Apis India has also reduced its debt from Rs 100 crore to Rs 73 crore, lowering its debt-to-equity ratio to 0.05 times. However, with just 23 shareholders, its free float is extremely low.
The perils of penny stocks
Remember that these stocks are mostly untradeable, leaving a long trail of unfulfilled buy orders while sell orders remain conspicuously absent. While you may be lured into trying your luck to buy these stocks in hopes they might do the magic Elcid Investments did, don't lose sight of the risks. The smoking rally in Elcid Investments was due to an unusual event resulting from SEBI's special call auction for price discovery. That other penny stocks will have a similar spectacular fate is highly unlikely and unpredictable. If anything, you risk getting yourself tied up in an illiquid worthless investment.
Disclaimer: This is not a stock recommendation. Investors must do their own research before making an investment decision.
Also read: Why NTPC Green, Adani Green, ACME Solar's eye-popping valuations need a reality check
Disclaimer: This content is for information only and should not be considered investment advice or a recommendation.
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