Vijay Kedia says many 'Gensols' still hiding, waiting to tumble; 10 red flags

Market veteran Vijay Kedia has cautioned investors to be vigilant about numerous Gensol-like companies that may currently be under the radar but have the potential to significantly erode investor wealth over time. According to Kedia, there are often clear warning signs — what he calls “red flags that scream before a scam”— that can help investors steer clear of such risky stocks.

“There are many ‘Gensols’ still hiding in the cupboard, waiting to tumble out with time. Let’s hope it’s not too late by then,” Kedia remarked in a post on X.

To recall, a formal complaint was filed with SEBI in June 2024 alleging price manipulation and fund misappropriation at Gensol Engineering Ltd. SEBI’s investigation subsequently revealed that promoter-directors Anmol Singh Jaggi and Puneet Singh Jaggi had fraudulently diverted company funds for personal gain, effectively running the publicly listed entity like a personal proprietorship. In the past six months, the Gensol Engineering stock has lost 85 per cent of its value. 

Reports indicate that the promoters transferred funds to related entities and used company resources for personal expenses, undermining corporate governance and investor trust.

Kedia emphasized the importance of avoiding companies that make exaggerated claims or maintain an outsized media presence through constant news mentions, social media activity, and frequent interviews — often amplifying even the most minor developments.

Investors, he said, should be careful with companies that raise funds frequently without clarity on deployment and also diversify into unrelated businesses just to ride trending narratives.

Companies overusing flashy buzzwords such as “AI-powered,” “next-gen,” “disruptive” to sound innovative without real substance should also be seen with a pinch of salt. 

Also, Kedia one should look for flaunt lavish promoter lifestyles that do not match company performance. Having high levels of promoter pledging, facing frequent exits of key personnel such as CFOs, auditors and CXOs and engage in excessive related-party transactions are other key red flags, Kedia said.