Mumbai: Shares of Patel Engineering Ltd have doubled over the last week after the Cabinet asked government agencies and public bodies to pay 75% of the money to contractors in cases of any dispute and a higher number of shares changed hands.
In Thursday’s morning trade, the stock hit a high of ₹ 93.5 a share, gaining as much as 9.9%. It has gained in 12 out of the last 14 trading sessions. Since 30 August, it has gained 103.7%.
The stock hit the upper circuit for fourth consecutive session and gained in 12 out of 14 trading sessions.
On 31 August, the Cabinet asked government agencies and public bodies to pay 75% of the money to contractors, even in case of a dispute. The decision aims to infuse liquidity into the stressed construction sector and help create more jobs.
The company has informed exchanges that these new norms will help reduce its debt by more than half. Patel Engineering has won arbitration awards in excess of ₹ 2,500 crore and it expects to receive around ₹ 1,875 crore immediately which will be utilised to retire debt.
At the end of March, the company had stand-alone debt of ₹ 4,535 crore.
Other construction companies have also gained. Since 31 August, Hindustan Construction Co. Ltd gained 55%, Punj Lloyd Ltd rose 25%, GMR Infrastructure Ltd jumped 19%, Ashoka Buildcon rose 16%, Jaiprakash Associates Ltd rose 13% and GVK Power & Infrastructure Ltd rose 9%.
Analysts expect the new policy to help construction companies infuse liquidity into the stressed sector and help create more jobs.