Mehul Choksi is also in the list of Fraud transactions!
Gitanjali Group is one of the top Jewellery Maker’s in India having great presence since many years. Nakshatra, Gili etc etc are the well known subsidiaries of Gitanjali Group. Mehul Choksi or MD of Gitanjali Group is the real face among company’s board who owns this group and its Legacy.
However, recent fraud discovered by PNB amounting over Rs 11,000 crore has changed the overall believes towards Gitanjali Group and its MD, Mehul Choksi. It has been found that around Rs 4800 crore fraud transactions are linked to Mehul Choksi and its firms.
Its Stock which was trading around Rs 75 before the release of this Fraud has now came around just Rs 37. It is very obvious to see such sharp fall because the fraud is linked to its promoter and company also.
Past year, stock of Gitanjali Gems had remained very volatile due to no. of events. Whereas, IPO approval for its Nakshatra was a great news for the Investors, Petition of Insolvency against the company were the top fear spreaders among Investors.
Fundamental view of Gitanjali Stock
Fundamentally, Stock was a attractive option in 2017 after rapid buying came in overall Jewellery sector. Even now, stock is still a attractive choice from fundamental point of view. But after hearing such news of Mehul Choksi, i think it would not be a good choice to buy Gitanjali Gems even at current levels.
Before this PNB Fraud of Rs 11k crore, I have also discussed about Vakrangee and Rcom. They were falling like a Knife but i suggested to buy them. Both of them had good assets value in markets and a good future perspective. However, management of these two’s had done none of any such things. And therefore, value of both stocks are now getting improved.
In case of Gitanjali Gems, I really feel that investors who were holding its shares from last few years have no fault. They were just practicing a normal trade and Investment practice. But yes, as we cannot change the current scenario, investors should be very cautious and should avoid any further buying at lower levels.
Upon the basis of current fraud, stock has potential to even fall below Rs 20 in short-term because there is no support now for Gitanjali Group. Because it could also possible that Financials of the company are also wrong and perhaps, real financial status of Gitanjali group could be very different.
Although, I would suggest to Gitanjali Gems Investors to exit from this stock on any opportunity if found to be above Rs 25. But if the stock falls below this level, it would not be a good decision to sell at such a cheap rate and therefore, long-term investors would have only option to continue holding their shares. However, it is also true that there are much better and safe options in market where you can double or triple your money in short-term. Meanwhile, I would also recommend to avoid any fresh or further buying in Gitanjali Gems because there is no signal of recovery. Only a positive clarification or announcement from Gitanjali Group has potential to change the overall Bearish environment.
Have any question related to this post? Feel free to ask through comment box given below.