Protean eGov Tech Shares Hit 20% Lower Circuit As Equirus Downgrades Stock After Project Loss

Protean eGov Technologies Ltd.'s share price hit the 20% lower circuit after Equirus Securities downgraded the stock to 'sell', as outlook on revenue growth turned bleak after it lost the PAN 2.0 government project. The brokerage has also reduced the target price to Rs 900 from Rs 1,730 apiece.

PAN business generates 50% of Protean eGov Technologies' revenue, and it has been a key driver of profitability and free cash flow for over a decade. It's the oldest and most stable revenue stream. As per Equirus Securities' base case, Protean eGov Technologies' PAN business will now unwind in two or three years.

The brokerage expects a 75–100% collapse in this revenue stream over two to three years. It expects a 35% drop in PAN business revenue in FY27 because of a cut in direct applications.

As far as Protean eGov Technologies' other revenue streams are concerned, ONDC's retail order volumes have slowed in recent months. The rollout of buyer and seller technology for its partners has also been slower than expected for its partners. This will also pressure the company's top line in the next few years. After assessing both segments, Equirus Securities has cut net profit estimates sharply by 58%.