Shares of the downtrodden and scam-hit Gitanjali Gems slipped below Rs 10 for the first time on Friday losing nearly 85% of its value since India's biggest banking fraud unravelled at nation's second-largest PSU bank PNB.
Shares of the downtrodden and scam-hit Gitanjali Gems slipped below Rs 10 for the first time on Friday losing nearly 85% of its value since India’s biggest banking fraud unravelled at nation’s second-largest PSU bank PNB. The shares of Gitanjali Gems can now be termed as a penny stock as the scrips having share price below Rs 10 are widely categorised as penny stocks. Shares of the Mehul Choksi-led Gitanjali Gems have been on a continuous declining trend since the time Punjab National Bank has informed about “unauthorised and fraudulent” transactions at the Brady House branch of Mumbai.
Gitanjali Gems’ haywire stock
The stock of Gitanjali Gems has witnessed the worst monthly fall in the lifetime. Shares of Gitanjali Gems have crashed as much as 84.73% to an all-time low of Rs 9.6 from a share price level of Rs 62.85 (closing price on 12 February 2018) on NSE. After the day when Punjab National Bank told about the fraud, entailing the billionaire diamantaire Nirav Modi and his uncle Mehul Choksi (promoter of Gitanjali Gems), on 14 February, shares of Gitanjali Gems nosedived 20% for two straight days. Considering the huge losses in the market capitalisation of Gitanjali Gems, stock exchanges have revised the circuit limits for two times in order to trim the daily erosion. The circuit limits on Gitanjali Gems shares was revised from 20% to 5% in a span of a week.
Market capitalisation loss
Over the course of fraud period beginning 14 February 2018, Gitanjali Gems had lost about Rs 634.9 crore in the market capitalisation. The Mumbai-based jewellery maker Gitanjali Gems commands a market capitalisation of Rs 114.46 crore as against a market capitalisation of Rs 749.36 crore (according to the closing price on 12 February 2018) on BSE.
Q3 results still awaited
As a part of regulatory requirements, every listed firm has to declare company’s financial results for a period of every quarter, six-month, nine-month and year-end. Gitanjali Gems has not declared the quarterly results for the period of October-December of the financial year 2017-2018. Following which, National Stock Exchange fined Gitanjali Gems for not filing the results. Taking a dig at Gitanjali Gems, Samir Arora of Helios Capital posted a tweet saying, “good to see that NSE come down heavily on Gitanjali Gems for not filing the results for Q3. Such serious violations from GG should not be allowed to go unpunished.” Only one small question – who does Gitanjali Gems pay first – NSE or PNB?, Samir Arora added.
Good to see that NSE has come down heavily on Gitanjali Gems for not filing results for Q3.
Such serious violations from GG should not be allowed to go unpunished.
Only one small q- who does GG pay first – NSE or PNB?
— Samir Arora (@Iamsamirarora) March 14, 2018
The diamond merchant Nirav Modi and his uncle Mehul Choksi have been the prime accused in the PNB fraud amounting Rs 13,600 crore. Nirav Modi group companies and Gitanjali Gems have allegedly obtained buyer’s credit from several domestic lenders outside India on the basis of fake LoU (Letters of Undertaking) issued by the rogue employees of PNB without registering the transactions into the SWIFT system and following proper protocols.