Protean eGov Technologies Stock Crashes 20%: Key Reasons & What Investors Should Know

On May 19, 2025, Protean eGov Technologies Ltd stock crashed 20% to hit the lower circuit on both the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). This setback was followed by the company's announcement that it had not been shortlisted by the Income Tax Department (ITD) for the PAN 2.0 project. Let’s take a closer look at what this project involves and how it could affect the company.

What Is the PAN 2.0 Project?

The PAN 2.0 Project is a government e-Governance initiative to upgrade the process of the taxpayer registration for PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number). The project aimed to upgrade the current PAN/TAN 1.0 system by improving the flow of both essential and support services and how PAN is verified.

The project basically covers everything from planning and building to running and taking care of these important tax ID services. If Protean had been selected for this contract, the company would have become a leading player in handling India’s tax-related technology.

In November 2024, the Cabinet Committee on Economic Affairs (CCEA) approved the PAN 2.0 Project of the Income Tax Department. During the announcement, the government had approved a budget of ₹1,435 crore for the project.

Protean's response and market reaction

In a regulatory filing disclosed on NSE, Protean confirmed its exclusion from the next stage of the project. The company also added that this would have a limited or no impact on its current work of handling PAN cards under its existing agreement with the Income Tax Department.

Protean already has a contract with the Income Tax Department to provide services like processing and issuing PAN cards, which the company will continue to do under this agreement.

What do investors need to know?

• Exclusion from PAN 2.0 Project: Protean was not shortlisted by the government for the ₹1,435 crore PAN 2.0 project, which marked a major strategic and revenue setback. This contract could have positioned the company as a long-term leader in the segment.
• Revenue dependence on PAN services: PAN-related services contribute nearly 50% of Protean's total revenue. As per the brokerage firm Equirus, the immediate impact of this potential revenue loss on FY26 results might be limited, but the company is projected to suffer a 75–100% decline in this revenue stream over the next two to three years and a potential 35% overall revenue drop by FY27.
• Brokerages turn bearish: Following this, the brokerage has downgraded Protean's share price from "Add" to "Sell," with a price target of ₹900, down from ₹1,730. Investor sentiment also turned bearish, and a significant sell-off occurred, as Protean’s share price hit a lower circuit of 20% today.

What does Protean eGov do?

• PAN Services: Protean issues, re-issues, and updates PAN cards and operates the TIN FCs and PAN Centres across India. As of December 2024, it has a 64% market share in terms of cumulative Pan Issuance. This segment formed 49.01% of the total operating revenue of the company during Q3 of FY25.
• Central Recordkeeping: The company acts as a Central Recordkeeping Agency (CRA) for the National Pension System (NPS) and the Atal Pension Yojana (APY), and is India’s largest CRA for NPS and APY with a combined market share of over 97%. This vertical accounted for 35.64% of the revenue during the quarter.
• Identity Services: It also offers services including Aadhaar authentication, Online PAN Verifications, e-KYC, and e-Sign services in India. In terms of online PAN verification, it holds 90% market share, while for e-Sign transactions, it commands 70% of the market, as of December 2025. Collections from this segment contributed 11.88% of the revenue.
• Others: Additionally, the company also operates several Open Digital Ecosystems (ODEs), including ONDC, Onest, Agristack, et al. These digital platforms allow businesses, developers, and other users to use the tools they need to build helpful apps and services, buy and sell online (e-commerce), improve farming with better information and tools (agriculture), or travel and delivery (mobility and transport).

Financial Performance of Protean

During Q3 of FY25, the revenue of the company shrank 6.1% to ₹218.35 crore YoY from ₹232.43 crore reported in the same quarter of the previous year. Profit for the quarter surged 35.6% to ₹20.93 crore against ₹15.43 crore booked in Q3 FY24. Revenue from the pension services (central recordkeeping vertical) of the company saw the highest (12.5%) YoY growth, while the PAN services business grew just 2.1% in Q3 FY25. The remaining two business segments saw a significant drop in collections during the quarter. Visit here to get historical quarterly and annual financials of Protean eGov Technologies.

Source: Company filings

Looking Ahead

Protean's exclusion from the PAN 2.0 project seems to be a huge setback for the company, as PAN services, the most crucial vertical, form nearly half of the company’s revenue. As per analysts, the total revenue of Protean is expected to hit by 35% in the coming 2 or 3 years.

Though the company still has an agreement with the government to provide services like processing and issuing PAN cards. The ₹1,435 crore PAN 2.0 project could have helped the company to grow significantly in the near term. Going forward, the company's future performance will depend on its ability to diversify revenue streams and adapt to the changing technological landscape.

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