Polycab India shares fall 5% after Income Tax raids at 50 locations

Polycab India shares tanked over 5 percent on December 22 amid reports that the income tax department is conducting searches at 50 locations of Polycab across India. The residences and offices of the top management linked to the firm were also being raided, reported CNBC TV18. The reasons behind the Income Tax Department’s searches and the nature of the investigation are not yet clear.

At 1:28 pm, Polycab shares were trading 5.04 percent lower at Rs 5,335 on the National Stock Exchange (NSE). The stock has risen over 100 percent so far in 2023, doubling investors’ money. In comparison, the benchmark Nifty 50 has risen around 15 percent.

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Polycab India manufactures and sells wires and cables and Fast Moving Electrical Goods (FMEG). The company’s business operations span across India through 23 manufacturing facilities, over 15 offices and more than 25 warehouses

For the quarter ended September 2023, Polycab India announced a consolidated net profit of 436.89 crore, a 58.5 percent increase from the previous year. Its revenue jumped 27 percent on-year to Rs 4,253. The company attributed the revenue growth to volume growth in wires and cables business. Its wires and cables revenue in the quarter grew by 28 percent on-year.

Polycab’s EBITDA in Q2 FY24 jumped 43 percent on-year to Rs 608.9 crore, and EBITDA margin improved 160 bps YoY to 14.4 percent. The company reasoned favourable product mix and better operating leverage for the increase in margins. FMEG business grew by 8 percent YoY in the quarter. Switches business saw its sales growth doubling YoY due to the base effect.

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