Posted on March 18, 2025, by Niftynews
Gensol Engineering Ltd has seen its share price plummet by a staggering 68% since the start of 2025, drawing increased scrutiny from investors and market watchers alike. On March 18, 2025, the stock closed at Rs 248.65 on the BSE, marking its lowest level in nearly 32 months. The dramatic drop in Gensol Engineering share price is primarily attributed to a series of negative developments, including credit downgrades, a seizure of shares by creditors, and concerns over the company’s corporate governance.
Promoters’ Declining Stake and Creditors Taking Control
A significant factor contributing to the decline in Gensol Engineering share price is the continued reduction in the promoters’ stake in the company. With three creditors seizing a portion of the promoters’ pledged shares, the situation is increasingly precarious for the company’s founders. On March 17, it was reported that Virtue Financial Services took control of 4.3% of the shares, while SICPA India seized 1.19% of shares. Earlier in March, Bajaj Stock Broking seized 1.47% of the promoters’ shares, further eroding the founders’ control over the company.
The sale of these pledged shares has led to a significant decline in investor confidence, resulting in the sharp drop in Gensol Engineering share price.
Gensol Engineering Faces Credit Downgrades and Default Risk
Adding to the share price woes, credit rating agencies have downgraded Gensol Engineering’s loan facilities, severely impacting the company’s financial stability. ICRA downgraded the company’s loan facilities worth Rs 2,050 crore, including a long-term term loan of Rs 925 crore and a cash credit facility of Rs 718.5 crore, to [ICRA]D—a default rating. Similarly, CARE Ratings also downgraded Gensol’s bank facilities totaling Rs 716 crore to CARE D, signaling a high credit risk.
These downgrades, combined with the company’s struggling liquidity, have raised serious concerns about the company’s ability to meet its debt obligations, which is also reflected in the declining share price.
Concerns Over Corporate Governance and Execution Delays
Further compounding the situation, ICRA reported that Gensol Engineering had falsified documents related to its debt servicing history, adding to concerns about corporate governance. These issues have raised alarms among investors, resulting in even more pressure on the stock price.
The company’s order book, which consists of 10-11 large projects, is also at risk due to execution delays, regulatory approvals, and potential cost overruns, further dampening investor sentiment and contributing to the 68% decline in Gensol Engineering share price.
Additional Challenges: CFO Resignation and Governance Issues
The situation was worsened when Gensol’s CFO, Ankit Jain, resigned for personal reasons. This move only deepened investor concerns, as it signified potential instability at the executive level. Jabirmahendi Mohammedraza Aga has been appointed as the new CFO, effective March 7, 2025, but the sudden change in leadership has added to uncertainty regarding the company’s direction.
Gensol Engineering Under Surveillance
As a result of the ongoing volatility, Gensol Engineering has been placed under the long-term Additional Surveillance Measure (ASM) framework by both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Stocks placed under the ASM framework are subject to heightened scrutiny and alerts for investors due to high volatility in prices, signaling potential risks for those holding Gensol Engineering shares.
Stock Split and Promoter Warrants
In a bid to reassure investors, Gensol Engineering also issued a statement clarifying the stock split and promoter warrants. The promoters’ warrants were issued at Rs 56 per share, reflecting a 113% premium over the current market price of Rs 262 per share (post the 10:1 stock split). The company emphasized that this pricing reflects the promoters’ confidence in future growth, despite the recent challenges.
What Does the Future Hold for Gensol Engineering?
With the 68% decline in Gensol Engineering share price and ongoing concerns over credit risk and corporate governance, investors are closely monitoring the company’s next steps. The company’s ability to address its debt issues, improve governance, and deliver on its project execution will likely be critical factors in determining whether the stock can recover.
For now, the company’s shares remain under pressure, and investors should proceed with caution, keeping a close eye on any further developments.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always consult with a financial advisor before making any investment decisions.
