Gensol Engineering Limited's share price dropped 8.2% to ₹307 in early trading on March 7, 2025, marking a 40.5% decline over four sessions. However, the stock rebounded 15% to ₹352.95 from its intraday low. At 10:30 AM, Gensol Engineering shares were trading 3% lower at ₹324.75.
The decline followed the resignation of Chief Financial Officer (CFO) Ankit Jain amid debt servicing concerns and allegations of falsifying debt servicing documents. These issues led to credit rating downgrades from ICRA and CARE. The company has appointed Jabirmahendi Mohammedraza Aga as the new CFO, effective March 7, 2025.
Debt concerns and asset divestment plans
Gensol Engineering is facing challenges in meeting its term loan obligations, prompting concerns among investors. The company's total debt stands at ₹1,146 crores, with reserves of ₹589 crore, resulting in a debt-equity ratio of 1.95.
To address liquidity challenges, the company announced a series of asset divestments. It plans to sell 2,997 electric vehicles worth ₹315 crores and divest a wholly owned subsidiary for ₹350 crores. The company expects these transactions to reduce debt by ₹665 crore, bringing the debt-equity ratio down to 0.8.
In a statement, Gensol Engineering acknowledged the credit rating downgrades and attributed them to a short-term liquidity mismatch. The company said it expects the situation to improve as customer payments materialise.
Company's response to rating downgrades
Gensol Engineering denied allegations of falsifying debt servicing documents and stated that it had formed a committee to review the matter. The company reiterated its commitment to accountability, transparency, and sustainable business practices.
The company also highlighted its strong financial position, citing an order book of over ₹7,000 crores and revenue growth of 42% to ₹1,056 crores in the first nine months of the current fiscal year. Additionally, EBITDA rose 89% to ₹246 crore, and profit increased 34% to ₹67 crores.
"In the current financial year, we have reduced our debt obligation by ₹230 crores," the company stated. It reaffirmed its focus on debt reduction through strategic asset sales.
Market reaction and investor sentiment
Gensol Engineering's recent volatility has influenced investor sentiment. While the company's efforts to reduce debt and address liquidity concerns are seen as crucial, market participants remain watchful of future developments.
Market analysts suggest that investors looking to buy shares online should closely monitor company disclosures and industry trends. The financial health of firms with high debt exposure can significantly impact stock performance.
Recent performance and share price trend
Over the past four trading sessions, Gensol Engineering shares have declined by 32%. In comparison, the benchmark NIFTY50 index has remained relatively stable during the same period.
The sharp decline followed the CFO's resignation and concerns over debt servicing. Despite a partial recovery, the stock continues to face selling pressure.
At 11:50 AM on March 7, 2025, shares of Gensol Engineering Limited were trading lower at ₹314.33 per share. For investors using digital platforms to buy shares online, it is very important to stay updated on corporate governance and financial stability indicators before making investment decisions.
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