Debt fears, governance issues rattle Gensol; BluSmart-linked stock plunges 47% in 10 sessions

Shares of Gensol Engineering, a company co-founded by the founders of BluSmart, have seen sharp correction in the last two weeks as growing concerns about debt repayment and corporate governance rattled the stock. The flagship engineering, procurement and construction (EPC) company of Gensol Group has lost over 47% in the past 10 sessions amid a slew of negative developments, including credit rating downgrades and concerns about the company's financial health.

Last week, Care Ratings and ICRA both downgraded Gensol's credit rating due to delays in debt servicing and concerns about corporate governance. Additionally, resignation of Ankit Jain, chief financial officer (CFO) and key managerial personnel, last week also dented sentiments.

Extending losses for the 10th straight session, Gensol Engineering shares were locked in 5% lower circuit at ₹305.15 on the BSE. The stock has nosedived 47% in the past 10 trading sessions, hitting multiple record low levels.

At the current level, Gensol share price is down 73% from its 52-week high of ₹1,125.75 touched on June 24, 2024. The counter has lost 67% in a year; 66% in six months; and 60% in the calendar year 2025. In the past one month, the stock has lost 59%.

Promoters sell stake to boost liquidity

In a bid to ease investors’ concerns about potential liquidity risks, the company's promoters have sold around 2.37% equity stake, or 9,00,000 shares, in the company, to  unlock liquidity and reinvest in the business. “This step is part of a strategy aimed at reinforcing the company’s balance sheet and supporting stability,” Gensol said in a BSE filing on March 7.

As per the company, the promoters will infuse the amount received through this sale or more amount in the warrant subscription round executed on June 18, 2024, thereby providing additional growth capital to the company. “Following this transaction, the promoters continue to hold a substantial 59.70% stake, reflecting their steadfast dedication to Gensol’s journey of delivering value to all stakeholders while driving forward the clean energy transition,” it added.

Meanwhile, Gensol said in a separate filing that its board would meet on March 13 to discuss fundraising proposal and stock split plan. The board is expected to consider raising funds through equity issuance, foreign currency convertible bonds (FCCBs), or other financial instruments.

Care, ICRA downgrade Gensol's credit rating

Last week, ICRA and Care Rating downgraded the renewable power company, raising serious concerns about liquidity risk. On March 4, ICRA downgraded the credit ratings of various loan facilities amounting to ₹2,050 crore, citing ongoing delays in debt servicing.

Raising similar concerns on on-going delays in debt repayment, CARE Ratings also downgraded the ratings assigned to the bank facilities of GEL on March 5. “GEL’s liquidity remains poor as reflected by the ongoing delay in the debt servicing,” it said in a note.

ICRA in the rating report mentioned that certain documents shared by GEL on its debt servicing track record, were apparently “falsified”, which raises concerns on its corporate governance practices, including its liquidity position. In the investor call transcript dated February 13, 2025, the management had highlighted total liquidity in the books of about ₹250 crore, in addition to access to working capital limits. However, the rating agency received feedback from the company’s lenders about the ongoing delays in debt servicing.

The rating agency also flagged the deterioration in the financial flexibility of the company with an increase in promoter’s share pledge to 85.5% of its holding in GEL in February 2025 from 79.8% in September 2024.

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