NCC Shares Hit 52-Week Low After NHAI's Two-Year Ban

Introduction

Shares of infrastructure firm NCC Limited experienced a sharp decline on February 19, falling by 5% to a 52-week low of Rs 136 in early trading. The sell-off was triggered by an order from the National Highways Authority of India (NHAI) debarring the company and its step-down subsidiary from participating in any of its tenders for a period of two years.

The NHAI Debarment Order

The order, issued on February 17, 2026, restrains NCC Limited and its subsidiary, O B Infrastructure Limited (OBIL), from participating in any bids or tenders issued by NHAI. This restriction is effective for two years, starting from the date of the order. The debarment prevents the company from acting as a concessionaire, contractor, EPC contractor, or consortium member in any new NHAI projects during this period. NCC has stated that it is currently reviewing the order and will take appropriate legal action.

Stock Market Reaction

The market reacted swiftly and negatively to the news. The stock opened lower and touched an intraday low of Rs 136, near its 52-week low of Rs 138.50 recorded on January 27, 2026. Although the share price saw some recovery, it was still trading significantly lower. At 9:17 AM, the stock was quoted at Rs 144.05 on the BSE, down 3.61% from its previous close of Rs 149.45. The stock is currently trading approximately 38% below its 52-week high of Rs 242, which it reached on June 9, 2025. The company's market capitalization stands at around Rs 9,383.17 crore.

Background of the Dispute

The debarment is linked to a long-standing dispute concerning a project executed by OBIL in Uttar Pradesh. The project involved the design, construction, finance, and operation of the Orai-Bhognipur section on NH-25 and the Bhognipur-Barah section on NH-2 on a Build-Operate-Transfer (BOT) annuity basis, under a concession agreement dated April 27, 2006. NCC claims that the project's execution was delayed due to NHAI's failure to hand over land on time and other contractual breaches. OBIL had initiated arbitration proceedings against NHAI and received a favorable award on November 20, 2024. However, NHAI has challenged this award in the Delhi High Court, where the matter is currently pending.

NCC's Official Stance

In a regulatory filing, NCC Limited contended that the debarment order was issued after the concession period had already been completed. The company also argued that it was not given an opportunity to be heard, which it considers a violation of the principles of natural justice. NCC has announced its intention to challenge the order legally. The company clarified that the ban will have no financial or operational impact on its existing order book or any ongoing projects. However, the potential impact on future business opportunities during the two-year debarment period cannot be quantified at this time.

Financial Performance Context

The NHAI order comes at a time when NCC's financial performance has been under pressure. For the quarter ended December 2025, the company reported a 36.6% year-on-year decline in net profit, which stood at Rs 122.46 crore. Revenue from operations also saw an 8.9% decrease, falling to Rs 4,868.29 crore. This combination of weaker financial results and the new business restriction has amplified investor concerns.

Future Outlook

While NCC has reassured stakeholders that its current operations remain unaffected, the two-year ban from bidding for new NHAI projects poses a significant challenge to its future growth pipeline. The company is a major player in the Indian infrastructure sector, and NHAI projects often constitute a substantial portion of new business for such firms. The outcome of NCC's legal challenge against the debarment order will be a critical factor in determining its ability to secure new large-scale projects in the medium term. Investors will be closely monitoring legal developments and the company's strategy for mitigating the impact of this restriction on its order inflow.