Polycab India shares fall after news of Income Tax raids at 50 locations

Polycab India shares fell on December 22 shortly after the news that the Income Tax department is conducting raids at 50 Polycab outlets across India.

According to a report the firm’s top management residences and workplaces were also confiscated. The reasons for the Income Tax Department’s searches and the nature of the probe are not yet clear.

Polycab shares were trading 2.4% down on the National Stock Exchange (NSE) at Rs 5,483.95 at 10:56 a.m. So far in 2023, the stock has increased more than 100%, over two times investors’ money. In comparison, the benchmark Nifty 50 has gained about 15%.

Wires and cables, as well as Fast Moving Electrical Goods (FMEG), are manufactured and sold by Polycab India. The company’s operations in India are spread among 23 manufacturing facilities, over 15 offices, along more than 25 warehouses.

Polycab India reported a combined net profit of 436.89 crores for the quarter ending September 2023, a 58.5 % increase over a year earlier. Its revenue increased by 27% on year to Rs 4,253. The company assigned the revenue growth to the wires and cables division volume growth. Its revenue from wires and cables increased by 28% on year during the third quarter.

Polycab’s EBITDA increased by 43% on year to Rs 608.9 crore in Q2 FY24, and its EBITDA margin increased 160 basis points to 14.4 %. The boost in margins was attributed to favourable product mix and improved operating leverage, according to the company.

In the third quarter, the FMEG business expanded by 8% on year. Because of the base effect, the Switches business saw their sales double quarter on year.