After the public-sector bank faced huge capital erosion on account of Nirav Modi scam unearthed in February this year (valued at $2 billion), PNB reported a huge quarterly loss for the month ended March of the order of Rs.13,417 crore, the highest quarterly loss ever posted by an Indian bank.
This made the stock of PNB plunge by as much as 12% in Wednesday's trade to Rs. 75.55 on the BSE, a price last reached two-years ago. With this, market capitalization of Punjab National Bank has come down to Rs. 20,856.13 crore while that of its subsidiary company PNB Housing Finance stands a tad higher at Rs. 21,122.08 crore.
The bank since the revelation of Nirav Modi scam has lost over half of its value. In a general case, market-cap of the parent company has to be higher than its subsidiary unit as the former has some core business operations other than the subsidiary business units.
But notably there are some examples of subsidiary companies whose market-cap is higher than the parent company; for instance, Maruti Suzuki's m-cap is higher than its parent company Suzuki Motors Ltd. Similarly, HDFC Bank has a lower m-cap than its parent company Housing Development Corp Ltd, amongst others.
To this brokerage houses have reacted with a negative outlook on the PNB stock and have downgraded the scrip. Also at the same, the target price for the stock has been reduced.
PNB so far has declined 55% in terms of its market price.