Polycab will overcome the effects of tax evasion charges and bounce back, says Amit Jeswani, Stallion Asset

Stallion Asset holds 2.8 percent of Polycab in its portfolio

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26 Aug, 2025 12:21

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Polycab has been in focus since tax evasion reports first surfaced, and it reported its biggest single intra-day drop since listing and then showed some recovery. For the month of January, the company’s 27 percent market cap has been shaved off.

Commenting on Polycab, Amit Jeswani, Founder of Stallion Asset, drew parallels to the 2021 IT raids on Ratnamani Metal. Amidst escalating crude prices and inflation, the company had encountered challenges, but eventually, the stock witnessed a significant upswing.

Jeswani noted that Polycab’s current market cap stands at approximately Rs 58,000 crore. The impending earnings release on January 18 is anticipated to provide insights into the company's quarterly performance. Analysts predict around Rs 1,800 crores in profit for the entire financial year 2024. If achieved without major discrepancies, Polycab's valuation would settle around 31-32 times the earnings. Jeswani emphasised that the issue at hand isn't overreporting revenues but underreporting, suggesting a potential understatement of around Rs 1,000 crores in revenue.

Considering the high news-driven nature of Polycab, Jeswani expressed a preference for other investment types, especially given the numerous B2B elements involved.

Also Read | Polycab India I-T raids: Will it singe other wire and cable manufacturers' valuations?

Looking ahead, Jeswani noted the transitory nature of current events, speculating that few would recall specifics two years from now. With the 18th approaching, the focus will shift to the earnings report, he said. He also drew attention to the audit by KPMG, which adds a layer of assurance, reinforcing the consistency of their investment approach. KPMG is the auditor for Polycab.

It is important to highlight that Stallion Asset holds 2.8 percent of Polycab in its portfolio. Jeswani mentioned that as of the previous day, Polycab’s share in the portfolio declined to 2.8 percent down from 3.5 percent pre-record 21 percent fall. The PMS held a 7-8 percent share of Polycab at the start of the month.

This resulted in a 70 basis points (BPS) decline, but the portfolio still closed positively. Attributing it to the natural ebb and flow of the market, Jeswani disclosed that at the start of the month, Polycab had a higher weight at 8 percent, but risk management protocols were activated when news surfaced, leading to a position trim.