GR Infraprojects hits all-time low, stock down 18% in 3 days amid CBI raids

No major negative disclosure from the CBI raid will be key triggers for future price performance, according to analysts at ICICI Securities.

Shares of GR Infraprojects hit a new low at Rs 1,111, down 4 per cent on the BSE in Wednesday’s trade. The stock has tumbled 18 per cent in the last three trading sessions after the Central Bureau of Investigation (CBI) conducted searches at several locations of the company premises.

GR Infraprojects on Monday, June 13, 2022 informed that a team of CBI conducted a search at the residence of Vinod Kumar Agarwal, Chairman and the corporate office of the company situated at Gurugram, Haryana and various other sites. The examination at the residence of the Chairman is complete as of now while the search is still in process at other premises.

As per media reports, the case pertains to a road contract in the north eastern region executed in 2018 for which discharge certificate was to be issued by the National Highway Authority of India (NHAI) after completion of four years of mandatory maintenance on March 31, 2022. It has been alleged that the NHAI officials have favoured GR Infraprojects in processing and clearance of final bills, getting bank guarantees and release of discharge certificate. The bribery amount was Rs 4 lakh.

In a separate regulatory filing on June 14, GR Infraprojects said that all the operations of the company including its core operations at construction sites all over India, are functioning without any impediment and continue to remain fluent, however it is difficult for the Company to assess the impact of the aforesaid matter on the Company at this stage. The company further said it undertakes to abide by all applicable laws and co‐operate with the law enforcement agencies.

GR Infraprojects made its stock market debut on July 19, 2021. The Rajasthan-based roads and highways construction major raised Rs 963 crore via initial public offer (IPO). The company had issued shares at Rs 837 per share. With the today’s fall, the stock has corrected 46 per cent from its record high level of Rs 2,277 hit on October 25, 2021.

“GR Infraprojects has built an efficient business model powered by robust execution skills and delivered strong revenue growth with elevated margins. However, recent development with regard to CBI’s raid would remain a key overhang on the stock’s performance. Till we get decent clarity, we revise our rating from BUY to REDUCE with a target price of Rs 1,080, “analysts at ICICI Securities said company report.

The decent order book position and execution pick-up to translate into 12.4 per cent topline CAGR over FY22-24E. Current order mix with built-in raw material price variation clauses provides margin sustainability at around 16 per cent. The no major negative disclosure from the CBI raid will be key triggers for future price performance, the brokerage firm said.

Technical View

Bias: Negative

Resistance: Rs 1,190

Support: Rs 1084

The short-term bias for GR Infraprojects is likely to remain negative as the stock has closed below its lower-end of the Bollinger Band for three successive trading sessions. The bias will remain bearish as long as the stock trades below Rs 1,190.

Among the key momentum oscillators, the DI (Directional Index) and MACD (Moving Average Convergence-Divergence) are clearly in favour of the bears. The 14-day RSI (Relative Strength Index) and Slow Stochastic are also negative, but in oversold territory.

On the downside, as per the quarterly Fiibonacci chart the stock has near support at Rs 1,084, below which the stock can slide to Rs 945.

(With inputs from Rex Cano)