28, February, 2024
HomeBusinessPolycab India Faces Market Turbulence: Shares Plummet 22% Amidst Unaccounted Sales Probe

Polycab India Faces Market Turbulence: Shares Plummet 22% Amidst Unaccounted Sales Probe

Published on

Polycab India witnessed a significant setback as its shares tumbled by 22% during morning trade on January 11. This downturn followed an income tax department search on the company’s premises the previous day, revealing “unaccounted cash sales” totaling around Rs 1,000 crore.

Read Also | OpenAI in Talks to Sell Shares at Estimated $86 Billion Valuation

The income tax officials conducted raids on 50 locations, including Mumbai, Pune, Aurangabad, Nashik in Maharashtra, Daman, Halol in Gujarat, and Delhi. Block deals worth Rs 1,293 crore occurred on the exchanges, with 33 lakh shares (representing a 2.2% stake) changing hands.

By 10:12 am, Polycab’s shares were trading at Rs 3,825 on the NSE, reflecting a substantial decrease in market capitalization by Rs 23,091 crore over the past nine sessions, bringing it down to Rs 59,270.70 crore.

The Central Board of Direct Taxes (CBDT) revealed that credible evidence pointed to unaccounted cash sales of Rs 1,000 crore, not recorded in the company’s books. The search operation covered not only Polycab’s premises but also authorized distributors associated with the group.

The investigation disclosed instances of “non-genuine” expenses amounting to approximately Rs 100 crore, including sub-contracting expenses, purchases, and transport expenses. The search operation further unveiled “unexplained” transactions by the distributor, involving the issuance of bills without actual goods supply, leading to artificial inflation of purchase accounts.

Nuvama Institutional Equities anticipates a medium-term impact on Polycab’s stock, expecting a de-rating on valuations, which had expanded to 37x throughout 2023. The upcoming Q3 results are seen as critical, with any revenue growth below 14-15 percent likely to trigger further negativity.

Additionally, Nuvama suggests that the development could jeopardize valuations in the entire cables and wires sector, as market assumptions may extend to other players engaging in similar practices. Stocks with significantly expanded valuations, like KEI Industries at 42x, are deemed at risk of de-rating in the immediate term.

Read Also | OpenAI Aims for $100 Billion Valuation in Fresh Funding Round

Conclusively, the news has sent shockwaves through the market, impacting not only Polycab but potentially influencing the valuation landscape for the broader industry in the short term. Investors are advised to seek guidance from certified experts before making any investment decisions.

Latest articles

Exclusive Discounts – Maruti Unveils Massive Savings on MY2023 Vitara, Fronx Models

Maruti Suzuki dealerships are currently rolling out irresistible discounts, exceeding Rs. 1 lakh, on...

Mahindra Set to Unveil 5-Door Thar SUV with Enhanced Features in Q2 FY2025

Mahindra, a prominent player in the Indian automotive market, is set to introduce the...

Renault Scenic E-Tech EV Earns Coveted Car of the Year 2024 Award

Renault's Scenic E-Tech electric SUV has secured the prestigious title of Car of the...

More like this

Expedia Announces 1,500 Jobs Layout Amid Shifting Travel Landscape

Expedia Group is set to trim its global workforce by 9%, amounting to approximately...

Bitcoin Surges Beyond $55,000: Cryptocurrency Market Update and Trends

Bitcoin has experienced an 8.14% surge in the last 24 hours, reaching $55,708.64, marking...

Paytm Shares Surge 5% Amid Leadership Changes: Unraveling the Rally

Paytm's stock witnessed a 5% surge today, spurred by the recent resignation of its...
Enable Notifications OK