Gensol promoters sell 2.37% stake after 70% stock plunge, plan equity infusion

Gensol Engineering’s promoters have sold 2.37% of their stake, amounting to 9 lakh shares—in a move they described as unlocking liquidity to reinvest in the business. The sale follows an alarming 70% plunge in the company’s stock over the last eight trading sessions, intensifying concerns about its financial health.

In a regulatory filing, the company stated, “The promoters have sold approximately 2.37% of total equity shares of the company, amounting to 9,00,000 shares, to unlock liquidity that will be reinvested into the business through equity infusion. This step is part of a strategy aimed at reinforcing the company’s balance sheet and supporting stability.”

The promoters intend to reinject the capital through a warrant subscription round, which was executed on June 18, 2024, ensuring additional growth capital for the company. Despite the offloading, the promoters retain a 59.70% stake in Gensol Engineering.

Meanwhile, the company has announced plans to consider a stock split and various fundraising options, including equity issuance and foreign currency convertible bonds, in its upcoming board meeting on March 13.

The stock’s decline, which began in late February, accelerated after multiple credit downgrades by agencies CARE and ICRA. On Thursday, ICRA downgraded Gensol’s loan facilities totaling Rs 2,050 crore. The long-term fund-based term loan of Rs 925 crore and the fund-based cash credit of Rs 718.5 crore were downgraded from [ICRA]BBB- (Stable) to [ICRA]D. Additionally, long-term and short-term bank guarantee (BG) facilities totaling Rs 406.5 crore, along with a sub-limit BG of Rs 51.3 crore, saw a downgrade from [ICRA]BBB- (Stable)/[ICRA]A3 to [ICRA]D.

CARE Ratings followed suit, downgrading Gensol’s bank facilities worth Rs 716 crore to CARE D, indicating default or high credit risk. The long-term bank facilities of Rs 639.7 crore were downgraded from CARE BB+ (Stable) to CARE D, while the long-term/short-term bank facilities of Rs 76.3 crore were also slashed from CARE BB+ (Stable)/CARE A4+ to CARE D.

Adding to investor unease, Gensol Engineering’s Chief Financial Officer (CFO), Ankit Jain, has stepped down. He will be replaced by Jabirmahendi Mohammedraza Aga. Shares of Gensol Engineering closed 4.2% lower at Rs 321.20 on the BSE on Friday.