Polycab Share Price: Polycab India’s stock journey: 30% dip on tax evasion concerns, countered by clarifications.
Jefferies remains optimistic with a Rs 7,000 target. Analysts note support levels, and investors monitor for potential shifts
Polycab Share Price
Polycab India saw a 5 percent surge, closing at Rs 4,198 on January 15, building on the momentum from the previous day when the company clarified that there was no demand notice from the income tax department.
This positive movement followed a 3 percent gain on January 12, rebounding from a 21 percent dip triggered by news that the I-T department had uncovered “unaccounted cash sales” during a search across 50 company premises.
Addressing concerns, Polycab India’s management, in a filing on January 12, reassured investors that no written information on the findings had been received.
They emphasized their commitment to cooperating fully with the I-T department, expressing confidence that there would be no significant impact on the company’s financial position.
The backdrop to this was an income-tax department announcement on January 10, revealing a search on “a cable and wire company” that led to the discovery of approximately Rs 1,000 crore in unaccounted cash sales.
Polycab Share Price: Jefferies’ target at Rs 7,000.
In its latest analysis, Jefferies has set a target share price of Rs 7,000 for Polycab India Ltd, expressing optimism about the company’s future despite ongoing concerns about alleged tax evasion.
Jefferies acknowledges the recent dip in Polycab India’s shares by 30%, attributing it to uncertainties surrounding the tax issue.
Drawing parallels with similar situations in other companies like Mankind Pharma, Shree Cement, Hero MotoCorp, Havells India, and RR Kabel, Jefferies notes that, historically, share prices tend to recover after initial setbacks due to regulatory concerns. This recovery is often driven by the companies’ business performance.
Jefferies’ Rs 7,000 target is based on a positive outlook for Polycab India’s Cables & Wires revenue, expecting a 21% compound annual growth over FY23-26.
This growth is anticipated to be fueled by potential increases in capital expenditure, infrastructure development, and an upswing in the housing sector in India.
Additionally, Jefferies suggests a downside scenario with a target of Rs 3,000 and an upside scenario target of Rs 8,000 for the stock.
These scenarios consider various factors, including potential challenges and positive outcomes related to the alleged tax evasion issue.
Jefferies emphasizes that its base case target factors in the company’s strategic initiatives, expected housing and capital expenditure revival in India, and the growth in Polycab India’s Fast-Moving Electrical Goods (FMEG) sector.
Polycab Share Price Brockage View
Polycab India’s stock is a “buy” with a target of Rs 7,000, indicating an impressive 76% potential upside.
Even though the stock experienced a significant drop of around 30% due to concerns about tax evasion, Polycab clarified on January 11 that they haven’t received any official communication from the Income Tax department about the search results.
The market is now eagerly awaiting more information for a clearer picture.
Polycab Share Price Analyst View
Polycab India’s stock has recently dipped below the critical 200-day moving average, indicating a potential negative trend in the short to medium term.
Adding to the concern, the price movement is struggling to gain buying interest, especially evident in the overbought region of the Relative Strength Index (RSI), as per the daily chart.
Avdhut Bagkar, a derivatives and technical analyst at StoxBox, highlights the fragile nature of the chart structure, suggesting that any further decline could invite more selling pressure.
Investors are advised to keep a close eye on these technical indicators for potential market movements.
According to analyst Bagkar from StoxBox, the stock’s current support levels are at 3500 and 2700, achievable in the coming months.
To shift the negative trend, the stock must surpass the 200-day moving average at 4433, which could attract bullish interest and signal a positive turn. Investors should monitor these levels for potential market moves.
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Polycab Stock Performance
Polycab shares have shown both resilience and challenges recently. In the short term, there’s been a 25.79% dip over the last 5 days and a significant 29.38% downturn in the past month.
Despite these setbacks, taking a longer view reveals a more positive story. Over 6 months, the stock has modestly increased by 2.39%. Remarkably, in the past year, Polycab shares have demonstrated strong performance, surging over 50%. Investors are witnessing a mix of short-term hurdles and a robust long-term growth trend with Polycab.
Conclusion:
Polycab India’s stock faced a recent dip due to concerns about alleged tax evasion, causing a 30% drop. However, the company clarified no official communication from the tax department has been received.
Jefferies remains optimistic, setting a target of Rs 7,000 with a potential 76% upside. Despite short-term challenges, historical trends suggest recovery post-regulatory setbacks.
Analysts highlight support levels at 3500 and 2700, and the stock needs to surpass the 200-day moving average at 4433 for a positive shift.
Polycab shares have shown resilience, experiencing a recent short-term decline but demonstrating strong long-term performance, with a remarkable 50% surge in the past year. Investors are closely monitoring the situation for potential market moves.
