Goldman Sachs maintains ‘buy’ call on Polycab, waits for further information on I-T raids

The brokerage said after the recent fall in stock price, Polycab is now trading at a discount compared to its peers

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Goldman Sachs has maintained the ‘buy’ call on Polycab India shares, while the firm waits for further information from the government and company regarding the outcome of the recent Income Tax department raid. The brokerage has a target price of Rs 5,750 on Polycab stock, indicating an upside of 33 percent from the current market price.

Polycab shares were trading at Rs 4,305 in the afternoon on January 16, up 2.54 percent from the previous day’s close.

Goldman Sachs said they take no view on the allegations. The brokerage firm added that after the correction in the stock, Polycab is now trading at a valuation of 29x FY25E, which is at a 38 percent discount to its peers.

Polycabs’s shares are down 24 percent in the last one month. The income tax department searched 50 premises of a “wires and cables” company in December. The department said it found unaccounted cash sales of Rs 1000 crore on January 10. Polycab had told stock exchanges that it did not receive any information regarding the outcome of the raid conducted by the department.

Jefferies also gave ‘buy’ rating to Polycab with a target price of Rs 7,000, indicating an upside of 62 percent. The brokerage expects the company’s sales to grow 15 percent YoY in the Q3 results. Jefferies also said they will wait for further clarity on the tax issue.

Also read: Cable shockers: Ultracab promoters’ stake sale makes Polycab’s poor governance look pretty

The brokerage compared previous instances in 2023 where shares of companies were hammered after searches from the Income Tax Department. Most of the companies such as Hero Motocorp and Mankind Pharma had seen a recovery in their share price driven by strong business performances. Shares of Hero Motocorp have rallied over 40 percent in the last 6 months, while Mankind Pharma has surged over 20 percent.