Gitanjali Gems, under probe in PNB fraud, loses over half its value in 8 days, with no end in sight

By: | Published: February 23, 2018 5:55 PM

Gitanjali Gems, the jewellery maker under probe of PNB's fraud of Rs 11,400 crore had lost about 60% of its market capitalisation over the course of eight days with no end in sight as the shares of jewellery maker have been on a lower circuit for the last seven straight days.

Gitanjali Gems had lost about 60% of its market capitalisation over the course of eight days. (Image: Reuters)

India’s biggest banking fraud at nation’s second-largest PSU (public sector undertaking) lender Punjab National Bank has gripped several jewellers under it along with the diamond merchant Nirav Modi. One of the jewellery maker named in Rs 11,400 crore fraud is Gitanjali Gems, a listed jewellery maker, allegedly involved in the scandal of fake LOUs. Though, Nirav Modi in a letter written to Punjab National Bank had cleared that his wife and uncle Mehul Choksi (promoter of Gitanjali Gems) have not been associated to any of his dealings with the bank. Shares of Gitanjali Gems have been declining continuously for the last eight days.

Gitanjali Gems had lost about 60% of its market capitalisation over the course of eight days with no end in sight as the shares of jewellery maker have been on a lower circuit for the last seven straight days. On 14 February 2018, when Punjab National Bank informed about that bank has detected “unauthorised and fraudulent” transaction in the Brady House branch of Mumbai, shares of Gitanjali Gems settled 6.76% lower at Rs 58.6 on BSE. Since after that day, the stock of Gitanjali Gems had been getting locked in the lower circuit for seven continuous days.

Also Read | PNB scam after effect: Gitanjali Gems shares dive 10%; company CFO resigns citing wife’s health

On the evening of 14 February 2018, PTI reported citing an unidentified bank official that four big jewellers namely Gitanjali, Ginni, Nakshatra and Nirav Modi are under scanner. The CBI and Enforcement Directorate are looking at their arrangements with various banks and end use of money. From 15 February 2018 onwards, shares of Gitanjali Gems had been in lower circuit. On 15 and 16 February, Gitanjali Gems stock fell 20% on both the days later on 19, 20 and 21 February, shares plunged 10%.

Also Read | PNB’s 5-day market cap loss exceeds Nirav Modi’s Rs 11,400 crore fraud

In order to limit the losses, stock exchanges have revised the circuits on the shares of Gitanjali Gems twice, first from 20% to 10% and then 10% to 5%. Even after the circuits have been revised to 5%, losses haven’t halted yet. In the last two days, the stock of Gitanjali Gems had shed 5% each on both the days. Following a huge decline in the share prices of Gitanjali Gems, about Rs 451.34 crore had been wiped off from the market capitalisation of Gitanjali Gems. According to today’s closing price of Rs 24.8, Gitanjali Gems commands a market capitalisation of Rs 294.17 as against Rs 745.51 crore as on 12 February 2018.

Also Read | India’s biggest banking fraud unravels at PNB: A look at scam in numbers

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