Gensol Engineering Ltd has witnessed a significant decline in its stock value, plummeting by 68% since the beginning of the year. The drop has raised investor concerns, primarily due to the declining stake of the company’s promoters and their inability to pledge more shares as collateral for loans. As a result, three creditors have seized nearly 7% of the pledged shares, further impacting investor sentiment. On Monday, the stock closed at Rs 248.65 on the Bombay Stock Exchange (BSE), marking its lowest level in nearly 32 months.
According to recent data, Virtue Financial Services and SICPA India took control of 4.3% and 1.19% of shares, respectively, while Bajaj Stock Broking seized 1.47% earlier this month. These developments followed warnings from credit rating agencies, which highlighted financial and governance challenges within the company. Founders Anmol Jaggi and Puneet Jaggi have been making efforts to retain control of the company, reclaiming a minor percentage of shares from a non-banking financial company in Delhi.
In response to the ongoing volatility, the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) placed Gensol Engineering’s securities under the long-term Additional Surveillance Measure (ASM) framework. This designation serves as a warning for investors, indicating heightened risks associated with stock price fluctuations.
The stock’s downward trajectory can be traced back to multiple credit downgrades issued by rating agencies CARE and ICRA. ICRA downgraded Gensol’s loan facilities worth Rs 2,050 crore, including a Rs 925 crore long-term loan and a Rs 718.5 crore cash credit facility, reducing their rating from [ICRA]BBB- (Stable) to [ICRA]D. Additionally, bank guarantees amounting to Rs 406.5 crore were downgraded from [ICRA]BBB- (Stable)/[ICRA]A3 to [ICRA]D. Similarly, CARE Ratings downgraded the company’s bank facilities totaling Rs 716 crore to CARE D, signaling default risks.
Further complicating matters, ICRA flagged Gensol for providing falsified documents related to its debt servicing history, raising serious corporate governance concerns. The company’s order book, which includes 10-11 large-scale projects, is now under scrutiny due to execution delays, regulatory hurdles, and potential cost overruns.
Adding to investor concerns, the company’s chief financial officer (CFO), Ankit Jain, resigned for personal reasons. His replacement, Jabirmahendi Mohammedraza Aga, assumed the role effective March 7, 2025.
Despite the turmoil, Gensol clarified the issue surrounding its stock split and promoter warrants, stating that the issuance of promoter warrants at Rs 56 per share represents a 113% premium over the adjusted market price of Rs 262 per share post the 10:1 stock split. The company emphasized that this move reflects the promoters’ confidence in future growth.
As per BSE data, Gensol Engineering currently holds a price-to-equity (P/E) ratio of 7.35 and a price-to-book (P/B) ratio of 1.47. Its earnings per share (EPS) stand at 33.85, with a return on equity (RoE) of 19.97. However, investor sentiment remains cautious amid the financial instability and governance concerns plaguing the company.
