Shares of Polycab India ended 21% lower on Thursday, extending their drop since the start of 2024. The Income Tax Department released a statement on Wednesday where it spoke of search operations at a cables and wires manufacturing company.
Sources tell CNBC-TV18 that the concerned company is Polycab.
Polycab's shares had declined 9% on Tuesday when reports of the search operations had first surfaced. The company issued a statement later that evening, denying any alleged tax evasion on their part.
Despite the negative start to the year that Polycab has had, majority of the street continues to remain bullish on the stock. Over 60% of the 31 analysts that track the company have a "buy" recommendation on the stock, while six each have a "hold" and "sell" rating respectively.
In fact, the number of "sell" recommendations on Polycab have declined for three months in a row until December last year.
Consensus price targets on Polycab imply a potential upside of another 14.5% on the stock from Wednesday's closing levels. Among analysts, Jefferies currently has a price target of ₹7,000 on Polycab, which is the highest on the street, implying a potential upside of 42% from Wednesday's close.
Polycab has been a ten-bagger stock since it listed in April 2019. The stock had an IPO price of ₹538 and was subscribed over 51 times, making it the fifth most subscribed IPO of the year. The stock had risen 84% that year. Shares made a record high of ₹5,733 in December 2023, making it a 10x return over its IPO price.
Barring the start of this year, shares of Polycab have delivered positive annual returns every single year since it listed, including returns of over 100% in 2023 and in 2021.
Promoters of Polycab have gradually reduced their shareholding over the last few quarters. As of September 30, 2023, promoter shareholding in Polycab stood at 65.91% from 67.97% in September last year.
The shareholding of India's domestic mutual funds in Polycab fell to a three-year low in September. It had peaked at 8.17% in March 2022 and as of September, domestic mutual funds hold only 6% stake in the company.
On the flip side, foreign investors have consistently increased their stake in Polycab. From around 9% in June, the FPI shareholding in Polycab stood at over 12% in September.
As of 12:30 PM, 2.7% equity of Polycab or 41 lakh shares worth ₹1,626 crore had exchanged hands in multiple large trades. Buyers and sellers in the transaction are not known.
Shares of Polycab ended 20.5% lower at ₹3,904.7. This is the biggest single-day drop seen by the stock since listing.
First Published: Jan 11, 2024 9:45 AM IST
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