Polycab shares continued to ease on Saturday following disappointing third-quarter net profit and additional pressure due to uncertainties surrounding the outcome of an income-tax raid on the wire and cables maker’s offices.

What Happened: Despite the challenging situation, brokerage firm Jefferies maintained its “buy” recommendation on the company but revised down the target price from ₹7,000 to ₹5,870. Jefferies attributed the margin miss to low exports and increased spending on advertisements during the quarter.

Jefferies emphasised that it awaits further clarity from the government regarding the income tax raid. In December, the income tax department conducted raids on 50 premises of Polycab. On January 10, the department announced the discovery of unaccounted cash sales amounting to ₹1,000 crore.

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However, Polycab has said that it has not received any communication from the Income Tax department regarding the outcome of the searches.

For the quarter ended December 2023, Polycab reported a 15.3% year-on-year growth in net profit to ₹416.51 crore, with net sales increasing by 16.8% to ₹4,340.47 crore. Jefferies, in a previous note, had anticipated a 15% growth in sales for Q3.

Price Action: Polycab’s share price was down 1.01% at ₹4,378 in afternoon trade on Saturday.

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