Gensol Engineering Promoters Take Action After Stock Plunge
In a surprising turn of events, the promoters of Gensol Engineering have decided to sell 2.37% of their stake in the company, totaling 9 lakh shares. This move comes amidst a significant 70% drop in the company’s stock value over the past eight trading sessions, raising concerns about its financial stability.
The company officially announced this decision in a regulatory filing, stating that the sale was aimed at unlocking liquidity that would be reinvested back into the business through equity infusion. This strategic move is part of a larger plan to strengthen the company’s balance sheet and ensure its long-term stability.
The promoters have revealed their intention to reintroduce the capital through a warrant subscription round that took place on June 18, 2024, providing the company with much-needed growth capital. Despite the sale, the promoters still maintain a majority stake of 59.70% in Gensol Engineering.
Upcoming Plans and Financial Challenges
Looking ahead, Gensol Engineering has disclosed plans to explore various fundraising options, including a potential stock split and equity issuance, during an upcoming board meeting scheduled for March 13. These initiatives are designed to address the recent challenges the company has been facing in the market.
The decline in Gensol’s stock value began in late February and was further exacerbated by multiple credit downgrades from rating agencies CARE and ICRA. ICRA, in particular, downgraded Gensol’s loan facilities totaling Rs 2,050 crore, affecting various aspects of the company’s financial structure.
The long-term fund-based term loan and fund-based cash credit were both downgraded from [ICRA]BBB- (Stable) to [ICRA]D, indicating a significant shift in creditworthiness. Similarly, both long-term and short-term bank guarantee facilities saw downgrades, adding to the growing concerns among investors and stakeholders.
Furthermore, CARE Ratings followed suit by downgrading Gensol’s bank facilities worth Rs 716 crore to CARE D, signaling a potential default or high credit risk. The CFO of Gensol Engineering, Ankit Jain, also made headlines by stepping down from his position, with Jabirmahendi Mohammedraza Aga set to take over the role.
Market Response and Closing Remarks
In response to these developments, shares of Gensol Engineering closed 4.2% lower at Rs 321.20 on the Bombay Stock Exchange (BSE) on Friday. The market reaction to these changes reflects the uncertainty and volatility surrounding the company’s future prospects.
As the situation continues to unfold, it is essential for investors and stakeholders to remain vigilant and seek advice from qualified financial advisors before making any investment decisions. The evolving landscape of Gensol Engineering serves as a reminder of the challenges that companies face in today’s dynamic market environment.
