This Solar stock, which deals in the business of EV Leasing, Manufacturing, and Solar consulting and Engineering, Procurement, and Construction (EPC), was down 4 percent in early trade after a promoter stake sale, a fund raise & a share split plan.
Share Price Movement
In Monday’s trading session, Gensol Engineering‘s share price touched a day’s low of Rs. 308, which is 4.31 percent lower. The share price reiterated from the day’s low and was trading at Rs. 309, which is 4.01 percent lower than the previous closing price of Rs. 321.90 apiece. In the past year, the stock has given around 66 percent negative returns and underperformed the Nifty Index.
What Happened
The company’s stock was in focus after Gensol Engineering exchange filing revealed that Promoters have sold 9,00,000 equity shares constituting ~2.37 percent stake to unlock liquidity and to reinvest in the business through equity infusion. This step is done to improve the company’s balance sheet and support liquidity.
Further, the filing mentioned that the promoters would infuse the same amount received through sale or more amount in the warrant subscription round, which was executed on June 18, 2024, thus providing further capital to the company. Following this transaction, the promoters will hold ~59.70 percent stake in the company.
Gensol plans to consider and approve a fund raise, stock split of face value of Rs. 10 per share, to be conveyed in the upcoming extraordinary general meeting dated March 13, 2025.
Recent ICRA Report
The company’s stock is in focus after Care Ratings and ICRA downgraded Gensol’s ratings for Bank Loan. Care Ratings has downgraded Long Term and Short Term Bank Facilities from BB+ (Stable) to D. ICRA downgraded Long and Short Term Loan from BBB- (Stable) to D. The “D” rating stands for default status where it means they are expected to default or the issuer considered the receiver as default on obligations to them.
In the recent ICRA report, the agency mentioned in credit challenges, which included liquidity, delays in debt servicing, and concerns over corporate governance.
The company had falsified documents regarding its debt servicing track record, raising doubts about its financial transparency. Delays in servicing debt to Blusmart bondholders and an increase in share pledge to 85.5 percent highlight issues with financial flexibility.
GEL’s unexecuted order book, which consists of 10-11 large projects, is at risk due to execution delays, regulatory approvals, and potential cost overruns. The company’s EV manufacturing business, which is still in the early stages, faces profitability concerns due to expected losses and uncertain demand.
Furthermore, the company has high leverage, with Rs. 1,512 crore in debt as of March 31, 2024, leading to a moderate credit profile. The intense competition in the solar EPC sector and the tender-based contract system also puts pressure on profitability margins.
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Recent Clarification on the Allegations
The company in the recent Investor Release, has denied the allegations of falsification claims and said that they have noted down the concerns raised by ICRA and CARE ratings. Gensol said to have divested assets, including 2,997 electric vehicles for Rs. 315 crore and a subsidiary for Rs. 350 crore, reducing debt by Rs. 665 crore, resulting in a 0.8 debt-equity ratio.
Financials
In its latest filing for the quarter ending December 2024, the company reported a 56.81 percent rise in revenue, reaching Rs.345 crore compared to Rs.220 crore in Q3FY24. During the same period, net profit increased by 50 percent to Rs.18 crore in Q3FY25, compared to Rs.12 crore in Q3FY24.
Business segment
Gensol’s 73.82 percent of operating revenue is from Solar EPC, 26.12 percent from Lease, and the remaining 0.05 percent from Others for the December 2024 quarter. The Operating profit for Solar EPC, despite an increase in revenue growth year on year, the profits declined. Further, leasing turned profitable after a loss in the same period.
Order Book & Fleet
The unexecuted order book as of 31st December 2024 stood at around Rs. 7,000 crore for the Solar Segment. They have more than 8,300 EVs on lease.
Company Overview
Gensol Engineering is a leading provider of renewable energy solutions in India, that specializes in solar power projects. They offer services, such as engineering, procurement, and construction (EPC), and have diversified into electric mobility and energy storage solutions. Recently, the company reduced debt by selling around 2,997 electric four-wheelers to Refex eVeelz.
Written by – Santhosh S
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