Shares of PNC Infratech Ltd on Monday plummeted after the Ministry of Roads (MoRTH) disqualified the construction firm and its two subsidiaries from participating in any new tender process of the ministry for a year. The stock nosedived 20 per cent to settle at its lower price band of Rs 366.70 on BSE.
Nuvama Institutional Equities has put the stock ‘under review’ after disqualification for a year from MoRTH projects. “MoRTH has disqualified PNC Infratech and its two subsidiaries from participating in any new tender process of the ministry (including NHAI and NHIDCL) for one year due to a bribery case filed by the CBI involving four employees of the company. There shall not be any impact on ongoing development, construction and O&M activities and the company can pursue opportunities with other central and state government authorities. We believe the stock shall be under pressure in the near term due to the adverse impact on order accretion for the company from MoRTH. Pending clarity on the impact of order wins from other government agencies, we put the stock ‘UNDER REVIEW’,” it stated.
The CBI had initiated an investigation against the company in June 2024 and apprehended four of its employees for bribing NHAI officials with Rs 10 lakh in exchange for final approval, a no objection certificate (NOC), and the processing of the final bill for NHAI’s Jhansi-Khajuraho project.
Following this, the CBI filed an FIR and a charge-sheet in June 2024 and August 2024, respectively. After a hearing, MoRTH has now disqualified PNC Infratech and its two subsidiaries from participating in any new tender process of the ministry for a period of one year, with effect from October 18, 2024. Since NHAI and NHIDCL too fall under MoRTH, the company is disqualified from participating in tenders with them as well, the domestic brokerage said.
“Some government departments have a clause, which debars companies that have been blacklisted by other government agencies from bidding for projects; thus, in our view, uncertainty about the company’s order accretion trajectory shall linger for the time being,” Nuvama mentioned.
“Management believes there shall 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 MoRTH order. They also believe this should not affect the KKR asset monetisation deal or the receipt of appointed date for the pending projects. In the meantime, while the designated court is yet to take cognizance of the case and the CBI has not yet discharged it, management is evaluating all possibilities including the legal actions that can be taken so as to mitigate the impact of this order,” the brokerage further said.
Incorporated in 1999, PNC is a civil engineering and infrastructure development company with expertise in execution of highways, bridges, flyovers, airport runways, power transmission lines, railway projects, development of industrial areas, etc. The company is also present in the asset development space.
