Shares of Krsnaa Diagnostics nosedived over 15 percent in early trade on July 20 after the National Health Mission, Rajasthan cancelled the letter of acceptance awarded to the diagnostics company for providing laboratory services in the state.
"As part of the tender requirements, there were requirements of provision of submitting additional performance security. There are disagreements over providing of this additional performance security due to certain technicalities," Krsnaa Diagnostics revealed in an exchange filing. It was based on these disagreements that the Rajasthan government chose to revoke the tender that was awarded to Krsnaa Diagnostics.
In an attempt to soothe investor concerns, the company also reassured that it has taken legal recourse in the matter and that the cancellation of the letter of acceptance does not in any way impact its existing business
operations.
However, investors did not seem to pay heed to the reassurances as concerns over a loss of potential revenue ran high. At 09.43 am, shares of Krsnaa Diagnostics were trading 11.5 percent lower at Rs 475 on the National Stock Exchange.
Trading volumes also surged in the counter as five lakh shares changed hands on the exchanges, higher than the one-month daily traded average of 64,000 shares.
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Meanwhile, concerns of rising pricing pressure from new-age online players have also been a drag on the sentiment for the company. Several analysts anticipate some pressure on the margins for incumbent diagnostics players as they attempt to undergo expansion in order expand their offerings and venture into newer geographies to deal with rising competition in the industry.
The persisting concerns among investors also seeped into a weak stock performance for Krsnaa Diagnostics in the recent past. As a result, the stock has shed around 19 percent in the past month.
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