Mumbai, Jan 11,2024: Shares of Polycab India crashed by 21 per cent on Thursday after the Income Tax Department’s statement that about Rs 1,000 crore in undisclosed sales had been detected in the recent raid on the wire and cables manufacturing company.
The Polycab stock fell to 3,904.7 at 3.30 pm on Thursday. The company’s shares had declined 9 per cent on Wednesday and it had issued a statement denying the allegations of tax evasion. The company shares had been rising steadily in recent weeks before the Income Tax raids were reported.
“The ongoing Rs 1,000 crore tax evasion case involving Polycab awaits further clarity. Amidst expectations of sustained volatility, there is an anticipation that the stock will underperform. Regarding Polycab’s core operations, the robust performance in cable and wires was fuelled by strong volume growth, higher government spending, and a thriving real estate market.
“Looking ahead, despite a favourable demand environment, a moderated growth pace is foreseen due to factors such as higher interest rates, increased input costs, and intensified competitive pressures. On account of valuation concerns, we had recommended a sell rating with a target price of Rs 4,473, which has been achieved,” Anil R., research analyst, Geojit Financial Services, said.
In a statement earlier, the company had said that it asserts its commitment to compliance and transparency, having fully cooperated with the Income Tax Department officials during the search proceedings in December 2023. The company has not received any communication from the Income-tax department regarding the outcome of the search, Polycab said.
Polycab India remains focused on its mission to provide quality products and services to its customers while upholding the principles of corporate governance and ethical business practices, it added.
On December 23, Polycab India said that the Income Tax Department has initiated a search at some of the premises and plants related to the company.
Polycab India Ltd (PIL) is India’s largest manufacturer of wires and cables and one of the fastest growing FMEG companies with a consolidated turnover of Rs 141 billion in FY23.