Polycab Plunges: Promoter Block Deal Triggers Market Jitters and Share Sell-Off

Polycab India, a prominent player in the wires and cables sector, experienced a significant jolt in the stock market on Monday, January 22nd. The company's shares witnessed a sharp decline of over 8 percent in early trade, sending ripples of concern among investors.

The dramatic downturn was primarily attributed to a massive block deal that saw a substantial chunk of Polycab's equity change hands.

Approximately 1.1 percent of the company's total equity, amounting to 16.5 lakh shares, was reportedly traded in this high-volume transaction. The deal, valued at a staggering Rs 850 crore, was executed at a price of Rs 5,150 per share, significantly impacting the stock's market performance.

Market analysts and sources quickly identified the likely sellers in this major transaction: a segment of the promoter group.

Specifically, reports pointed to the Tarun Jain family, one of the co-founders instrumental in Polycab's establishment and growth. This divestment aligns with earlier speculations that the family was exploring options to offload a portion of their substantial stake.

Prior to this block deal, indications were that the Tarun Jain family was contemplating the sale of up to a 2 percent stake in Polycab, translating to roughly 30 lakh shares, with an anticipated value of around Rs 1,500 crore.

The strategic rationale behind this move was cited as part of a broader succession planning exercise and a proactive step towards wealth diversification, allowing the family to restructure their portfolio.

Upon the completion of this proposed divestment, the promoter's overall holding in Polycab India is expected to slightly decrease from its previous level of 66.07 percent to approximately 64.07 percent.

While still a commanding majority, such changes in promoter holdings often garner close scrutiny from the market.

The sharp fall comes despite Polycab India's stellar performance in the preceding year. The company's stock had been a darling of the market throughout 2023, boasting an impressive gain of over 120 percent, showcasing robust investor confidence and strong fundamentals.

However, the recent block deal temporarily overshadowed this strong track record, prompting a re-evaluation by some market participants.

As the market processed these developments, Polycab India shares were trading at Rs 5,185.00 on the BSE at 9:25 am, reflecting the immediate impact of the significant transaction and the ensuing market reaction.

Investors will now closely monitor Polycab's stability and future trajectory following this notable change in its ownership structure.