FPIs Lose Over Rs 1,900 Crore As Polycab Shares Fall 21% After IT Raid

Foreign portfolio investors lost Rs 1,900 crore on Thursday after the income tax department detected unaccounted cash sales of Rs 1,000 crore and Rs 400 crore cash payments made by a distributor on behalf of Polycab India Ltd.

Shares of the company declined by over 21%, with the lower price band being revised three times during the course of the day on Thursday.

Total investor wealth erosion stood at Rs 15,500 crore, after the market capitalisation for the company fell over Rs 58,600 crore at the end of the day.

The income tax department initiated search and seizure operations against the wire manufacturer on Dec. 22, 2023, as notified by the Press Information Bureau on Jan. 10, after market hours.

The search action was conducted at more than 50 premises located in Mumbai, Pune, Aurangabad, Nasik, Daman, Halol and Delhi.

Among institutional investors, FPIs held the most amount of shares at 1.82 crore, between 419 investors.

The IT raids on Polycab came roughly a month after the department conducted searches on another cable and electrical manufacturer—RR Kabel Ltd. Shares of the company fell on Nov. 29, after reports of the raids.

The company had listed on the exchanges on Sept. 20, 2023, after an initial public offering, with a fresh issue of Rs 180 crore and a total issue size of Rs 1,964 crore. Since listing, the stock rose over 52% in the span of two months, before paring some gains to trade 27% above its listing price.

However, similar stocks in the cable and electrical manufacturing space, with high promoter holdings, have grown to over twice their initial value over calendar year 2023.