Shares of this multibagger cable stock under the ‘large-cap’ category slipped close to 5 percent in Friday’s trading session due to multiple reports mentioning raids by the Income Tax (IT) Department at over 50 locations of the company.
With a market capitalization of Rs 80,788.50 crores, the stocks of Polycab India Limited opened their trading hour on Friday at Rs 5,638.65 and currently trade at Rs 5,380.05, slipping approximately 5 percent compared to the previous closing levels of Rs 5,620.60 apiece.
Such bearish stock price movements are observed after multiple news reports initiated coverage about multiple raids by the IT Department at over 50 locations of the company.
According to a report by CNBC TV18, the residences and offices of the top management linked to the firm were also being raided. The reasons behind the searches conducted by the IT Department and the nature of the investigation are not yet clear.
During the recent financial quarters, the company’s basic business parameters such as operating revenues and net profits have shown positive movements.
The former increased from Rs 3,889.38 crores during Q1FY23-24 to Rs 4,217.7 crores during Q2FY23-24, and the latter, keeping the timeframe the same, moved up from Rs 402.81 crores to Rs 429.77 crores.
Moreover, the profitability metrics of the company such as return on equity (RoE) and return on capital employed (RoCE) rose with the former increasing from 16.52 percent during FY21-22 to 21.18 percent during FY22-23, and latter, during the same period, shifted from 21.66 percent to 28.47 percent.
As per the recent presentations, the company portrayed an increase in capex spending during the recent financial quarters, viz, Rs 152 crores during Q1FY24 to Rs 204 crores during Q2FY24.
Year-to-date, the company’s shares have been successful in delivering multibagger returns of approximately 110 percent, viz, if someone had invested Rs 1 lakh into the stock at the inception of this calendar year, it would have converted to Rs 2.10 lakhs.
Polycab India Limited is involved in the business of manufacturing as well as selling wires, cables, and fast-moving electrical goods under the ‘POLYCAB’ brand. The company’s product portfolio includes power cables, control cables, instrumentation cables, optical fibre cables (OFC), solar cables, and others.
Written by Amit Madnani
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