Polycab India's Promoters Eye $100M Boost Through Strategic Stake Sale

Polycab India, a prominent player in the wires and cables industry, is making headlines as its promoter group embarks on a significant financial maneuver. They have launched a block deal aimed at divesting a portion of their stake, with aspirations to raise approximately $100 million (equivalent to around Rs 830 crore).

The deal involves the sale of a substantial 30.5 lakh shares, representing roughly 2% of Polycab India’s total equity.

For investors looking to participate, the floor price for this transaction has been set at Rs 5,020 per share. This figure represents an attractive discount of about 5% when compared to the stock's closing price of Rs 5,284.15 on Monday, May 27th.

Sources close to the development indicate that this strategic sale is primarily geared towards attracting institutional investors.

Leading financial advisory firms, JM Financial and Morgan Stanley, have been entrusted with managing this block deal, underscoring the professional and structured nature of the transaction.

The timing of this move is particularly noteworthy, given Polycab India's stellar market performance. The company's shares have demonstrated remarkable resilience and growth, more than doubling their value over the past 12 months.

Furthermore, they have surged by an impressive 45% since the beginning of the year, signaling strong investor confidence and robust business fundamentals.

However, the company's journey hasn't been without its share of challenges. In December 2023, Polycab India faced scrutiny following search operations conducted by the Income Tax department.

These events temporarily cast a shadow, leading to a dip in the stock's performance. The company, however, swiftly addressed the concerns in January 2024, vehemently denying allegations of tax evasion and clarifying that it was fully cooperating with authorities. This transparent approach helped the stock quickly recover its losses, reaffirming its strong market position.

Prior to this block deal, the promoter group held a substantial 65.01% stake in Polycab India, indicating a strong commitment to the company's long-term vision.

This current stake sale, while significant in terms of capital raised, represents a relatively small adjustment to their overall holding, suggesting a strategic financial optimization rather than a change in core ownership philosophy. The proceeds from this sale are expected to further strengthen the promoter group's financial position, potentially paving the way for future strategic initiatives or diversification.