On January 10, 2024, the Income Tax Department conducted a raid on Polycab, revealing unaccounted sales amounting to ₹1000 Crore. This development significantly impacted the company’s financial standing, leading to a substantial decline in its stock value. On January 9, 2024, the stock witnessed a notable drop of nearly 10%, and upon the confirmation of the news regarding the Income Tax Department’s findings, it experienced a further plummet on January 11, 2024 of 22% in a single day, reaching a low of ₹3878 from ₹4906.
Since its listing on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) on April 16, 2019, at a share price of ₹633, Polycab India had demonstrated remarkable growth. The stock achieved an all-time high of ₹5733, marking a remarkable increase of 905% from its initial listing price. Notably, in the year 2023 alone, Polycab witnessed a substantial surge of 125%, climbing from ₹2546 to ₹5733.
This turn of events underscores the challenges faced by Polycab and the subsequent market reactions, reflecting the intricacies of the corporate landscape and its vulnerability to regulatory scrutiny.
Technical Analysis
Based on our technical analysis, it is evident that there exists a support range between ₹3400 and ₹3600. It is likely that the stock may undergo consolidation within this range for a certain period before potentially experiencing a further decline. The subsequent support range lies between ₹2750 and ₹2890. In the event of a breach within this range, it is advisable to refrain from considering the purchase of the stock until the Income Tax department resolves the reports associated with it.
Financial Details Of PolyCab India Limited
As of January 11, 2024, Polycab India’s market capitalization remained robust at ₹58,226 Crore. The Return on Capital Employed (ROCE) stands at an impressive 27%, while the Return on Equity (ROE) is 20%, both surpassing our benchmark of 15%. Notably, the company exhibits a low debt-to-equity ratio, indicating a solid financial position. Foreign Institutional Investors (FII) and Domestic Institutional Investors (DII) holdings contribute significantly to the company’s ownership structure.
The Earnings Per Share (EPS) is noteworthy at ₹107, far exceeding the industry average of ₹5. This emphasizes the company’s profitability and shareholder value. Polycab’s sales growth in recent years has been commendable, registering a 20% increase, surpassing our benchmark of 15%. The average sales growth over the past three years stands at 16.9%, further attesting to the company’s robust financial health.
| Market Cap | ₹ 58,226 Cr | Stock P/E | 36.2 |
| ROCE | 27.0 % | ROE | 20.0 % |
| Debt to equity | 0.03 | Debt | ₹ 213 Cr. |
| FII Holding | 12.4 % | DII Holding | 8.08 % |
| EPS | ₹ 107 | Sales growth | 20.4 % |
Conclusion – Buy Or Not
The recent Income Tax Department raid on the company revealed unaccounted sales amounting to ₹1,000 Crore. It is advised to monitor the stock as it seeks support around the range of 3400 to 3600 initially, followed by a stronger support zone between 2750 and 2890. Observing the stock’s movement at these price levels is crucial. Additionally, staying updated on Polycab-related news is essential. Keep a vigilant eye on any developments regarding the resolution of the defaults or amendments to the identified faults. Stay informed for timely decision-making.
Disclaimer
Investing in stock market is risky and subject to the market condition. This article provides an examination of the company for educational purposes only. We are not SEBI( Stock exchange board of India) registered advisors, and this is not an investment advice. We do not provide tips or calls.. Before making an
