Shares of Gensol Engineering Ltd have continued their downward spiral, hitting a 52-week low of Rs 335.35 on Thursday, March 6, 2025, following successive credit rating downgrades by CARE Ratings and ICRA. The stock has been locked in the lower circuit of 10% for three consecutive trading sessions, shedding nearly 40% in the last three days and over 66% in one year.
Why Did Gensol Engineering Stock Price Fall?
The recent plunge in Gensol Engineering’s stock price was triggered by:
- Credit Rating Downgrade: CARE Ratings and ICRA downgraded the company’s long-term and short-term bank facilities due to delays in servicing its term loan obligations.
- Liquidity Mismatch: The company admitted to facing short-term liquidity mismatches but assured that the situation is improving with customer payments underway.
- Falsification Allegations: ICRA alleged that Gensol provided falsified documents regarding debt repayment records, raising concerns over its corporate governance practices.
Company Clarification
In response to the allegations, Gensol Engineering issued a clarification denying any involvement in falsification claims. The company announced that it would set up an independent committee to review the matter.
“We deny any involvement in falsification claims and are committed to addressing the concerns responsibly. The rating downgrade happened due to short-term liquidity mismatch, which is improving by way of customer payments,” the company said.
Debt Reduction Measures
To improve its financial health, Gensol Engineering announced a series of asset divestments:
- Sale of 2,997 electric vehicles worth Rs 315 crore.
- Sale of a wholly owned subsidiary for Rs 350 crore.
- The proceeds from these divestments will be used to repay existing debt and improve liquidity.
The company expects these measures to cut debt by Rs 665 crore and bring down its debt-to-equity ratio to 0.8.
Financial Performance
Despite the ongoing crisis, Gensol Engineering reported strong growth in key financial parameters:
| Metric | 9M FY25 | YoY Growth |
|---|---|---|
| Revenue | Rs 1,056 crore | +42% |
| EBITDA | Rs 246 crore | +89% |
| PAT | Rs 67 crore | +34% |
| Order Book | Rs 7,000 crore | - |
Promoter’s Assurance
In an exclusive interaction, Anmol Singh Jaggi, Chairman and Managing Director of Gensol Engineering, announced that the company’s promoters would buy shares from the open market to restore investor confidence.
“We are committed, strong, and will bounce back. Either we will infuse liquidity by subscribing to our warrants or buy shares from the market,” Jaggi said.
Conclusion
Despite Gensol Engineering’s clarifications and debt reduction plans, the stock continues to face intense selling pressure. The market remains skeptical about the company’s corporate governance practices and liquidity position. Investors will be closely watching the company’s actions in the coming weeks to regain confidence and stabilize its stock price.