Why PNC Infra stock has tanked 35% in 2 days, hit 52-wk low today? Details

PNC Infratech plunged 18% to Rs 299 in intra-day trade on Tuesday, with a combined 7.25 million shares representing 2.82% of total equity having changed hands on the NSE and BSE till 09:42 AM

Shares of PNC Infratech hit a 52-week low of Rs 299, plunging 18 per cent on the National Stock Exchange (NSE) on Tuesday. PNC Infratech shares extended their previous day’s fall after the Ministry of Road Transport and Highways (MoRTH) disqualified the company from participating in any tender process of the ministry for a period of one year with effect from October 18, 2024.

The stock of the civil construction company has tanked 35 per cent in two days. It is trading at its lowest level since May 2023. The company had informed the stock exchanges about the development on Saturday, October 19, 2024.

At 09:42 AM, PNC Infra was quoting 7 per cent lower at Rs 342.25 amid heavy volumes. The average trading volumes on the counter jumped multiple-fold. As many as a combined 7.25 million shares, representing 2.82 per cent of the total equity of the company, have changed hands on the NSE and BSE. 

In an exchange filing, PNC Infratech said that the company, along with its subsidiaries PNC Khajuraho Highways Private Limited and PNC Bundelkhand Highways Private Limited, has been disqualified from participating in any tender process by the MoRTH for a period of one year, starting from October 18, 2024.  

The decision stems from an investigation involving a First Information Report (FIR) filed by the Central Bureau of Investigation (CBI) in June 2024. After a personal hearing and submission of evidence by PNC Infratech and its subsidiaries, MoRTH passed the disqualification order, citing concerns over violations related to the FIR.

However, the management indicated that they do not expect any material impact on the ongoing development, operations and maintenance (O&M) activities of the company and its subsidiaries including the two SPV’s on account of the aforesaid order of MoRTH.

The company's order book as of September quarter (Q2FY25) stood at Rs 18,730 crore, 2.5x book to bill. After bagging Rs 4,630 crore orders in June quarter (Q1FY25), the company had guided for further order inflows of Rs 8,000 crore in FY25. It also bagged a project worth Rs 2,040 crore from CIDCO in Q2.

While asset monetisation, claims and incremental cash will free up capital for the company and drive scalability, for orders, it will have to depend on state highways and non-road segments for order inflows, wherein risk of likely aggressive bidding and/or not winning enough to meet FY26/FY27 growth, remain, according to analysts at ICICI Securities.

The brokerage firm said it has now downgraded PNC to 'Hold' from 'Buy' earlier, and assigned a target price of Rs 400 on the sum of the total parts (SoTP) basis (vs Rs 620 earlier). It now values the company's construction business at 10x FY26, compared to 15x, earlier.

“We also note that the company believes the current development should not impact Asset Monetisation. Nonetheless, among the assets to be monetised, it also includes assets under PNC Khajuraho Highways Private Limited and PNC Bundelkhand Highways Private Limited. Thus, we will monitor any update on the same,” ICICI Securities said in a company update.

Meanwhile, PNF Infra on Monday informed the stock exchanges that the company and the two SPVs have filed three separate Writ Petitions on October 21, before the High Court of Delhi challenging the ministry's order.

It has also filed three separate applications requesting the Delhi High Court to pass ad-interim orders staying the effect, operation and implementation of the impugned order with immediate effect, till the disposal of the Writ Petitions it has filed.