Why Patel Engineering is Down?

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Patel Engineering evoked a lot of interest during its IPO when it was heavily subscribed. However this time it has bitten more than it can chew and it is reflecting in share price going downwards.

Patel Engineering in its exuberance bid for National Highway Authority of India (NH1A) project for six laning of expressway in West Bengal and Orissa. However on being awarded the contract it failed to live upto its commitment and backtracked siting the unviability of the project.

As a net result NH1A blacklisted it for one year which has been even upheld by Supreme Court as it asked to come down heavily on defaulters. It is a black stigma mark on Patel Engineering performance. Now it has to do drastically do something miraculous as its interest cost has also risen 10 times from Rs 21.6 Crore to Rs 210.67 in a matter of 5 years.

Verdict

Study the viability of project before jumping the gun in exuberance.

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