Polycab shares gain for third straight day, up nearly 4%; is this a good time to buy the stock?
Polycab India, a leading electrical wires and cables manufacturer, jumped 3.60% to ₹4,351.75 apiece. This comes on the heels of an 8.2% surge over the last two trading sessions. Between January 04 and January 11, the company's shares faced downward pressure amid reports of tax evasion allegations.
During this period, the stock witnessed a significant decline of 28.23%. However, the shares staged a recovery in Friday's trade (January 12) after the management clarified that the company had not received any written information on the findings. According to the Ministry of Finance, the Income Tax Department (“I-T Department") officials had initiated a search proceeding at some of the premises and plants of the company from December 22, 2023, to December 30, 2023.
The search has revealed unaccounted cash sales of ₹10 billion (not recorded in the books), unaccounted cash payments exceeding ₹4 billion made by a distributor on behalf of Polycab, and ₹1 billion of non-genuine expenses, as per reports. Also Read: Polycab India Stock: Over 28% drop in 6 sessions leads to retail investors losing ₹3,108 crore In the midst of this uncertainty, global brokerage firm Jefferies has retained its positive outlook on the company in its latest note. It retains the 'buy' rating on the stock, with a target price of ₹8,000 apiece and 7,000 apiece under its bull case scenario and its base case scenario, respectively.
However, the brokerage said it awaits further clarity on this issue. Jefferies projects a 15% year-on-year (YoY) growth in the company's sales for Q3 FY24. Additionally, it anticipates a 40-basis point YoY expansion in the operating profit margin.
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