Ramesh Damani-Owned Protean eGov Falls 20% as PAN 2.0 Slips Away

Protean eGov Technologies Ltd Shares, a Ramesh Damani-owned company, fell 20% on Monday to hit the lower circuit limit of ₹1,143.20 on the Bombay Stock Exchange (BSE). This decline came after the company disclosed that it was not shortlisted by the Income Tax Department (ITD) for its ambitious PAN 2.0 project, a government-led initiative to overhaul the technological infrastructure behind PAN and TAN systems in India.

If you’re wondering why this caused such a reaction in the stock market, Protean was widely expected to play a key role in this revamp. The company had bid to become the project’s Managed Service Provider (MSP). The news that it would not be advancing to the next round of the selection process triggered a sharp sell-off in the stock, erasing all the gains it had made in the past year.

Let’s explain what happened, why it matters, and the implications.

What Happened?

On Sunday, Protean informed exchanges via a regulatory filing that it had not been “considered favourably” by the ITD for the next round of the RFP (Request for Proposal) process for the PAN 2.0 project.

In the same filing, the company clarified that this setback is related to the government’s technology revamp of the PAN system, covering everything from design and development to implementation, operations, and maintenance. Importantly, Protean also stated that its current operations around PAN processing and issuance will continue under its existing mandate, with minimal or limited impact.

Despite this assurance, the market responded negatively. On Monday, the stock tanked 20%, hitting the lower circuit and closing at ₹1,143.20. This price is now over 4% lower than it stood a year ago, effectively wiping out a year’s gains.
Source: Economic Times

Who Owns Protean eGov?

Among the notable shareholders is veteran investor Ramesh Damani, who held a 1.05% stake in the company as of the March 2025 quarter. Other institutional investors include:

• State Bank of India (4.93%)
• Axis Bank (3.18%)
• Punjab National Bank (2.25%)
• Bank of Baroda (1.54%)
• Canara Bank (1.23%)

According to Trendlyne, the stock had four ‘buy’ recommendations, with an average target price of ₹2,104, indicating a potential upside of 47% before the recent crash. Source: Economic Times

What Is PAN 2.0?

The PAN 2.0 project is a large-scale government initiative with a budget of ₹1,440 crore. The objective is to rebuild the entire technology stack that supports the issuance and management of Permanent Account Numbers (PAN) and Tax Deduction and Collection Account Numbers (TAN) in India.

The new system aims to introduce straight-through processing, digitise the application journey, and improve deduplication and verification processes. The ITD sees the initiative as a long-term technology overhaul that would serve as the backbone of India’s direct tax infrastructure for the foreseeable future.

Protean, which has historically played a central role in PAN issuance, was expected to maintain or expand its involvement through this project. Missing out on this opportunity could reshape its role in the future of India’s tax-tech ecosystem.
Source: Financial Express

Why Is This Significant for Protean?

PAN services have historically contributed significantly to Protean’s overall business. In the first half of FY25, the PAN segment accounted for 61% of the company’s total revenue, and Protean held a 64% market share in cumulative PAN issuances. The segment grew 33% between FY22 and FY24, buoyed by rising PAN adoption and initiatives like the Aadhaar-PAN linkage deadline.

In January, the company highlighted the “significant headroom” in PAN-related services, noting that PAN penetration in India remains below 40%. However, without participation in PAN 2.0, its future growth in this space now looks uncertain.
Source: MoneyControl

What Did the Management Say?

In its regulatory filing, Protean emphasised that its current services would continue under the existing contract with the ITD. The company believes the new platform will have limited or minimal impact on ongoing PAN processing operations.

During its December earnings call, the management explained that the PAN 2.0 project aims to refresh the IT stack behind PAN issuance, improve backend processing, and introduce newer methods of application and distribution. However, they also admitted it was too early to estimate the revenue impact if the bid failed, stating, “We’ll have to see more clarity as the project gets implemented.”

What Do Analysts Say?

According to brokerage firm Equirus, the development poses a serious long-term risk to Protean’s revenue structure. While the immediate impact on FY26 earnings may be limited, Equirus forecasts a 75–100% decline in PAN-related revenue over the next 2–3 years. This could result in a 35% overall drop in total revenue by FY27.

The firm also noted that free cash flows previously used to support new business initiatives are now at risk, especially as other segments, such as ONDC retail volumes, remain stagnant. As a result, Equirus downgraded the stock from “Add” to “Sell” and sharply reduced its target price from ₹1,730 to ₹900. Source: Financial Express

Stock Performance Overview

Protean’s stock had already been showing signs of weakness:

• Down 15% over the past five trading days
• Down 22% over the past month
• Down 22% over the last six months

Monday’s 20% crash further deepened the stock’s downward trajectory, pushing it well below analyst expectations and significantly under its previously estimated fair value.

What Lies Ahead?

The key concern now is Protean’s dependency on PAN-related services, which form the bulk of its revenues. With this contract loss, the company may need to reassess its long-term strategy, diversify revenue streams, and explore other public digital infrastructure projects more aggressively.

For now, shareholders—including prominent names like Ramesh Damani and several major public-sector banks—are likely to closely monitor how Protean navigates this shift.

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