Shillong, January 11: In the dynamic landscape of the Indian stock market, the Sensex and Nifty 50 experienced a remarkable upswing in 2023. However, the real narrative unfolded in the broader markets, where midcap and smallcap indices outshone their frontliner counterparts by a substantial margin.
The spotlight of 2023 was on smallcap and midcap companies, showcasing impressive surges of 44.6% and 49.1% throughout the year, marking a stellar annual performance. Even in 2024, the Nifty Smallcap 100 and Nifty Midcap 100 indices continued their ascent, reaching record highs.
As per Equity Master, contrary to this widespread midcap rally, Polycab India, a prominent wire and cables manufacturer, faced a dramatic 20% decline in its stock price on Thursday, extending a downward trend observed since the beginning of 2024. The catalyst for this plunge was the recent statement from the Income Tax Department on Wednesday, revealing findings from search operations at the cable and wires manufacturing company.
The flagship company was exposed for engaging in unaccounted cash sales totaling approximately Rs 10 billion, which were not documented in official records. Furthermore, as per reports compelling evidence surfaced during the search, indicating unrecorded cash payments exceeding Rs 4 billion made by a distributor on behalf of the flagship company, specifically for the procurement of raw materials.
Adding to the complexities, Polycab’s promoters have steadily reduced their shareholding over the past few quarters, standing at 65.91% as of the September 2023 quarter, down from 67.97% in the same period last year. Promoters selling their shares can erode faith in a company, potentially reflecting uncertainties about its prospects and raising doubts about long-term commitment.
As of today, Polycab India has experienced a 20% loss, with shares down 30% in the past month. However, over the past year, the company’s shares have traded 47% higher, showcasing the tumultuous journey it has undertaken in the recent market landscape.