Polycab India plumbs 6-month low after tax department finds Rs 1,000 crore in unaccounted sales

Bengaluru: Polycab India plunged 23 per cent to a six-month low on Thursday after a tax department search at the wire and cable maker found unaccounted sales worth Rs 1000 crores ($120.46 million).

If losses hold, the stock is set for its worst day since March 2020, when coronavirus fears had gripped markets.

India's income tax department said on Wednesday it found the unaccounted sales during a search at a wire and cable maker in December. While the department did not name the company, a government source said it was referring to Polycab.

"Preliminary analysis suggests that the flagship company indulged in unaccounted cash sales, cash payments for unaccounted purchases, non-genuine transport and sub-contracting expenses... for suppression of its taxable income," the department said in a statement.

Polycab did not respond to Reuters' request for comment on the income tax department's allegations.

The stock, recommended by 15 analysts as a 'buy' or 'strong buy' according to LSEG data, fell 10 per cent to a lower limit at Thursday's open and was last trading down 18.6 per cent at Rs 3,997.

It was held at exchange-imposed lower limits thrice, with trading volumes at the highest since its 2019 listing after just over an hour into the session.

Polycab earlier this week denied rumours of tax evasion. The stock had plunged 9 per cent on Tuesday but closed slightly higher in the following session after the denial.

The company reported revenue of Rs 4,218 crore ($508.10 million) in the September quarter, up 27 per cent over the previous year and almost double its first reported revenue in the quarter ended March 31, 2019, following its listing.

The stock soared nearly 1,000 per cent to a record high of 5,733 rupees in December, compared to its initial public offering price of 538 rupees.

($1 = 83.0154 Indian rupees)