Why PNC Infratech Shares Tumbled 20%?

On October 21, 2024, PNC Infratech shares suffered a significant blow with a steep fall of 20%. The significant decline was triggered by a disqualification imposed by the Ministry of Road Transport & Highways on Saturday. The company, along with two of its subsidiaries, were barred from participating in any tender processes of the Ministry for a period of one year, commencing October 18, 2024.

The disqualification was raised from an FIR and Charge Sheet filed by the CBI in June and August of this year, respectively. PNC Infratech and its subsidiaries were summoned by the Ministry on October 18 for a personal hearing to address these allegations.

The company in the exchange filing assured that ongoing development, construction, and O&M activities would not be affected, it acknowledged that the impact on other operations would need to be assessed and communicated.

The disqualification has significant implications for PNC Infratech’s growth prospects. The company had previously guided for an order intake of ₹8,000 to ₹10,000 crore for the current financial year, surpassing the ₹5,000 crore worth of orders where it emerged as the lowest bidder.

Moreover, the company’s revenue growth forecast for the full year has been revised downward from 10% to a flat or a decline of 10% compared to the previous year. The executable order book at the end of the June quarter was estimated to be ₹19,000 crore, including the L1 of ₹5,000 crore.

The market reacted strongly to the news, with PNC Infratech’s shares plummeting by 20% to ₹366.70 at 10:50 AM. This sharp fall erased much of the gains made during 2024, leaving the stock with a year-to-date increase of only 3.97%.

About PNC Infratech Limited

Incorporated in 1999, PNC Infratech Limited is one of the front-end infrastructure development, construction, and management companies in the country. The company undertakes infrastructure projects, including highways, bridges, flyovers, power transmission lines and towers, airport runways, industrial area development, and other infrastructure activities.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.