PNB drops out of top-100 most valued stocks

At 11:55 am; with Rs 272 billion market-cap, PNB stood at 108th position, lost Rs 120 billion from Rs 392 billion as on February 12, 2018.

Punjab National Bank (PNB) is no longer in the list of India’s top-100 most valued companies/banks in terms of market capitalisation (market-cap) after a stock price of the bank declined 31% in past one week.

In the backdrop of discovered some fraudulent and unauthorized transactions amounting to Rs 114 billion ($1.8 billion) last week, the public sector lender market-cap stood at Rs 272 billion on Tuesday at 11:55 am, which put it in the 108th position, the BSE data shows.

In past five trading days, PNB has saw a market-cap erosion of Rs 120 billion from Rs 392 billion as on February 12, 2018. The bank stood at 74th position in overall market-cap ranking has lost 34 positions during the period. PNB had market-cap of Rs 416 billion at the beginning of the current calendar year 2018.

The stock hit a fresh 52-week low of Rs 111 on BSE in intra-day trade today, declined 31% from Rs 162 on February 12, 2018.

PNB now stands much behind of Bank of Baroda which has market-cap of Rs 328 billion today, against Rs 389 billion on last Monday. Idea Cellular, ABB India, TVS Motor Company, ACC, MRF, Oil India and United Breweries are other notable companies that currently stood ahead of PNB in overall market-cap ranking.

Meanwhile, Moody's Investors Service has today placed  under review for downgrade PNB local and foreign  currency deposit rating of Baa3/P-3 and foreign currency issuer rating  Baa3.

At the same time, Moody's has placed the bank's Baseline Credit Assessment (BCA) and adjusted BCA of ba3 and the Counterparty Risk Assessment (CRA) of Baa3(cr)/P-3(cr) under review for downgrade.

“The primary driver for today's rating action is the risk of weakening of the bank's standalone credit profile, as a result of the discovery of a number of fraudulent transactions. On 14 February 2018, PNB announced to the Indian stock exchange that the bank had discovered some fraudulent and unauthorized transactions amounting to Rs 113.9 billion ($1.8 billion),” Moody's Investors Service said in a statement.

Moody's however assumes a very high probability of government support for PNB in times of need, resulting in three-notch uplift to its deposit and issuer ratings from its BCA. In the review for downgrade, Moody's will also assess government support for the bank's deposits and senior unsecured debt, it added.

Moody’s said the review for downgrade will focus on the timing and quantum of the financial impact of the fraudulent transactions, any management actions taken to improve the capitalization profile of the bank, and any punitive actions taken by the regulator on the bank.