Polycab Plunges 4% After Q3 Earnings Disappoint

19 Jan 2024 , 03:56 PM

Polycab India’s shares saw a second consecutive dip on Friday, falling more than 4% to the day’s low of Rs 4,250. This decline followed the company’s December quarter financial announcement, which showed a sequential decline in its bottom line.

For the quarter that concluded in December, Polycab India recorded double-digit growth in both revenue and profit. Consolidated income from operations increased by about 17% to Rs 4,340 crore, while the consolidated net profit increased by 15.4% YoY to Rs 413 crore. In comparison to Rs 430 crore in Q2FY24, the bottom line decreased 3% sequentially, while the top line increased by a modest 3%.

To reach Rs 569.20 crore, consolidated profits before interest, taxes, depreciation, and amortisation, or EBITDA, rose by 13% over the same period last year. Nonetheless, the operating margin decreased to 13.12%, a loss of 44 basis points.

From Rs 3,273 crore a year earlier to Rs 3,865 crore this quarter, total expenses—including financing costs—rose. To reach Rs 32 crore, finance costs rose more than three times over the same period last year.

The cost of raw materials went from Rs 2,614 crore to Rs 3,051 crore in the previous year. Approximately 79% of all expenses during the quarter were related to the cost of raw materials.

The company that manufactures electrical equipment has been in the headlines unfavourably lately as investors have taken a big hit to its stock.

Following a recent raid on the Polycab group, the Income Tax department discovered ‘unaccounted cash sales’ of approximately Rs 1,000 crore, which caused shares of Polycab India to plunge 20% to the day’s low of Rs 3,801.

The Central Board of Direct Taxes (CBDT) claimed in a statement that ‘unaccounted cash of more than Rs 4 crore was seized and more than 25 bank lockers were put on restraint after the searches were launched against the group on December 22 last year,’ as per a PTI report.

Although the company has lost 21% of its value in the last month, its gains over the previous year have still been substantial at 56%, outpacing the Nifty’s almost 19% returns.

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