The Ministry of Finance issued a statement on 10 January 2024, announcing that the Income Tax Department initiated search and seizure operations in connection with "a group involved in the manufacturing of wires, cables, and other electrical items", along with some of their authorized distributors. The extensive search encompassed over 50 premises located in Mumbai, Pune, Aurangabad, Nasik, Daman, Halol, and Delhi, leading to the discovery and confiscation of a substantial amount of incriminating evidence in the form of documents and digital data.

Preliminary analysis of the seized evidence unveiled the group's involvement in various tactics for tax evasion, including unrecorded cash sales, off-the-book cash payments for purchases, and misrepresented transport and subcontracting expenses, aimed at suppressing taxable income. The evidence indicated unaccounted cash sales totaling approximately Rs 1,000 crore, unrecorded cash payments of over Rs 400 crore, and non-genuine expenses amounting to around Rs 100 crore, all linked to the flagship company.

The search also revealed unexplained transactions by a distributor, issuing bills without genuine supply of goods, resulting in inflated purchase accounts totaling about Rs 500 crore. Additionally, unaccounted cash exceeding Rs 4 crore was confiscated during the search, and over 25 bank lockers were placed under restraint.

Meanwhile, Polycab issued a clarification on 10 January 2024, denying the rumors of tax evasion and stressing its commitment to compliance and transparency. The statement also affirmed the company's full cooperation with the income tax department and noted that it was awaiting official communication on the outcome of the search proceedings.

Polycab India is the largest manufacturer of Wires and Cables in India and fast growing player in the Fast Moving Electrical Goods (FMEG) space. The Group is also in the business of Engineering, Procurement and Construction (EPC) projects.

The company's consolidated net profit jumped 58.81% to Rs 425.56 crore on 26.57% increase in revenue from operations to Rs 4,217.69 crore in Q2 FY24 over Q2 FY23. Revenue grew on the back of strong volume growth in wires & cables business.

The Polycab India stock has corrected 27% from its recent high of Rs 5,484.85 hit on 29 December 2023. It is down 31% from its record high of Rs 5,722.90 hit on 14 December 2023.

On the daily chart, the stock is currently trading below its 20, 50, and 200-day simple moving averages placed at 5348.60, 5295.23 and 4428.34, respectively.

On the technical front, the stock's daily RSI (relative strength index) stood at 16.58. The RSI oscillates between zero and 100. Traditionally, the RSI is considered overbought when above 70 and oversold when below 30.