Ashoka Buildcon shares slump 6% after NHAI suspends bidding rights amid investigation

Ashoka Buildcon share price slumped by 6% during Friday’s trading session after the company announced that the National Highways Authority of India (NHAI) has momentarily barred it from entering into current and future bids.

The NHAI's suspension will last for one month or until the Expert Committee concludes its investigation regarding the collapse of two precast PSC girders on the six-lane elevated corridor from Aroor to Thuravoor Thekku, part of NH-66.

One of the girders fell onto a commercial vehicle, resulting in a fatality for the driver. Ashoka Buildcon indicated that it received a show-cause notice from the NHAI on Wednesday, November 26.

The company firmly refutes the claim that public safety was compromised. According to Ashoka Buildcon, the incident arose from sudden and unexpected circumstances that cannot be linked to any failure in the company's safety measures, as stated in an exchange filing on Thursday.

They explained that the incident was due to a sudden malfunction of a hydraulic jack, which occurred because of damage to the internal seal. This led to a girder falling onto a moving goods vehicle that had entered an area marked as a prohibited construction zone.

Ashoka Buildcon emphasized that it has continuously enforced and upheld all safety measures and protocols consistent with industry standards, contractual obligations, and relevant codes and safety regulations.

It stated that it is currently evaluating the financial consequences of the incident and will inform the exchanges about this in a timely manner. It also noted that all of its other operations continue to be unaffected.

Additionally, the company announced in a recent exchange filing that it has purchased 3,40,000 equity shares (valued at ₹667.09 crore) of Ashoka Concessions Limited, a subsidiary, to make it a wholly owned entity. The company, along with its subsidiary Viva Highways Ltd., has also acquired the remaining CCDs from the investors, allowing for their complete exit from Ashoka Concessions Ltd.

This acquisition is in line with the Securities Purchase Agreement made with Macquarie SBI Infrastructure Investments Pte Limited and SBI Macquarie Infrastructure Trust (collectively referred to as the “Investors”), aimed at acquiring all of the investors' holdings in Ashoka Concessions and facilitating their exit.

This is not classified as a related party transaction, as the investors do not qualify as a related party to the company. The transaction is purely a commercial deal with the investors.

Ashoka Buildcon share price today

Ashoka Buildcon share price today opened at ₹172.95 apiece on the BSE, the stock touched an intraday high of ₹180.10 per share, and an intraday low of ₹172.90 per share.

According to Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One, Ashoka Buildcon share price opened with a gap down and is currently hovering near the crucial ₹170 support zone, which has held firm multiple times over the past seven months.

“ A breakdown below this level may lead to further weakness, while a bullish reversal from here could pave the way for a recovery towards ₹200–210,” said Bhosale.

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