India's Protean eGov sinks on ouster from key government project
Protean has been managing applications for Permanent Account Numbers, or PAN cards -- used to maintain every taxpayer's record -- since around 2006. It claims roughly 60% market share for the service, which accounts for about half of its revenue.
However, Protean said on Sunday that the income tax department has "not considered favourably" the company's bid as a service provider for PAN 2.0, a $168 million project to consolidate multiple platforms and portals, and quicken processing times.
Protean's shares slumped a maximum-allowed 20% on Monday, on course for their worst day since listing on the National Stock Exchange in early February this year.
The company said it expects no operational impact on its current PAN business of processing and issuing PAN cards.
"We have reached out to the tax department to seek further clarity on their stance. As of now, we see limited impact," Managing Director Suresh Sethi said on an investor call.
However, Equirus Securities forecast a much bigger hit.
"While the impact (this fiscal year) may be muted, we expect a 75%-100% collapse in this revenue stream over the next 2-3 years," Equirus Securities said, downgrading the stock to "sell".
"About one-third of the industry's PAN requests currently originate directly from websites of PAN service providers -- volumes that will almost certainly shift to the PAN 2.0 contract winner once it goes live."
It was not immediately clear who else bid for the project.
ICICI Securities said Protean was considered the leading contender "by a distance" for PAN 2.0 and losing out "creates uncertainty on PAN business outlook over (the) medium term."
($1 = 85.3330 Indian rupees)
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