The income tax department is conducting searches at Mankind Pharma Ltd's office in New Delhi, two government sources told Reuters on Thursday, days after the condom maker's successful public listing on domestic stock exchanges.
The company's shares fell as much as 5.5% on the news.
The searches may last for two to three days, said the second source. Neither source elaborated on the reason for the search. They declined to be named as they were not authorised to speak to the media.
Mankind Pharma and the IT department did not respond to Reuters' requests for comment.
Mankind Pharma shares debuted on the Indian stock exchange on Tuesday and surged about 32%, valuing the maker of Manforce condoms at 569.76 billion rupees (nearly $7 billion), in a rare instance of a successful domestic public listing this year.
The stock was last trading down nearly 2% at 1,360 rupees on Thursday but was still well above its initial public offering offer (IPO) price of 1,080 rupees.
Mankind Pharma says its Manforce is the top-selling male condom brand in India, where it competes with Reckitt Benckiser Group's Durex and TTK Group's Skore.