PNC Infratech share tanks 20%, hits over nine-month low; here's why

PNC Infra along with its arms PNC Khajuraho and PNC Bundelkhand Highways, has been disqualified from participating in any tender process by the MoRTH for a period of 1 year, starting from Oct 18.

PNC Infratech share price: Shares of construction engineering company PNC Infratech were locked in the 20 per cent lower circuit at Rs 366.70, hitting over nine-month low on the BSE in Monday’s intra-day trade after the Ministry of Road Transport & 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 is trading at its lowest level since January 10, 2024. Till 09:56 am; a combined 5.18 million shares have changed hands and their pending sell orders for a combined 2.3 million shares 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.  CLICK HERE FOR FULL DETAILS

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.

PNC Infra further said there will not be any impact on the ongoing development, construction, operations and maintenance (O&M) activities of the company and its subsidiaries; including the two SPVs on account of the aforesaid Order of MoRTH dated 18.10.2024. However, the impact on other activities if any will be evaluated and intimated accordingly.

PNC Infratech provides end-to-end infrastructure implementation solutions, including EPC services on both an item rate and a fixed-sum turnkey basis. The company also carries out and implements projects using various public-private partnership models, such as Design-Build-Finance-Operate-Transfer (DBFOT) and Operate-Maintain-Transfer (OMT). It is one of the few infrastructure firms in India with a track record for construction, development, and management.

ICICI Securities highlight that while ongoing projects, including development, construction, and operations, will remain unaffected by this order, this disqualification affects the company’s ability to participate in future tenders of Morth/NHAI for a year. The company 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. The brokerage firm said it awaits management commentary on the way ahead but expects a negative reaction on the stock due to this development.

As of June 30, 2024, the company’s unexecuted order book stands at Rs 19,098 crore which is 2.5 times of FY24 revenue. Out of the unexecuted order book of Rs 19,098 crore, highway, expressway & Canal contracts contribute around 82 per cent, while water projects contribute around 18 per cent.