Krsnaa Diagnostics share price cracks over 10% after Rajasthan NHM cancels contract; check details

Krsnaa Diagnostics share price plunged over 10% on Thursday after Rajasthan government terminated tender to supply lab services under National Health Mission. Krsnaa Diagnostics shares began trading at intraday high of ₹486.25 apiece on BSE. 

In an exchange filing, the company stated that this was in reference to the acceptance of a letter of award from the National Health Mission (NHM), Rajasthan, which it described as "the authority" for the provision of "Laboratory Services under Free Diagnostics Initiative on HUB and SPOKE Model under NHM" throughout the entire state of Rajasthan to the Company in consortium with the Telecommunications Consultants India Ltd ('TCIL'), which was the lead bidder and a 100% Government of India undertaking.

The provision of providing additional performance security was required as part of the tender specifications. Because of some technical issues, there have been conflicts regarding the provision of this additional performance security.

"Whilst we have made various representations to the authorities on the same as well as communicated our willingness and commitment to execute the agreement. However, to our disappointment, the authorities decided to cancel the letter of acceptance," said the company in an exchange filing.

The company further stated that it was crucial to understand that the letter of acceptance's cancellation had no effect whatsoever on their current business operations.

On the technical front, the stock price fell 16.2% and underperformed its sector by 45.1% in the past year.

“A strong gap down opening is seen in this counter with prices down more than 10% at the time for writing, some bounce is seen from the lower end and prices are trading around its crucial support of 200sma. However, the momentum remains on the bearish side hence any bounce should continue to use for exiting longs with 510 - 520 to act as immediate resistance and 440 next support,” said Rajesh Bhosale - Equity Technical and Derivative Analyst, Angel One.