The shares of one of the leading Infrastructure stocks, specialising in providing engineering, procurement, and construction (EPC) services, hit a 2 percent lower circuit as NCLT likely orders an asset freeze against promoters.
With a market capitalization of Rs. 234.36 crores on Thursday, the shares of Gensol Engineering Limited hit a 2 percent lower circuit, making a low of Rs. 61.66 per share compared to its previous closing price of Rs. 62.91 per share.
Gensol Engineering Ltd. is currently embroiled in a significant financial and legal crisis. The National Company Law Tribunal (NCLT) has ordered the freezing of bank accounts and lockers of Gensol, as well as assets linked to 37 individuals and entities associated with the company.
This action follows allegations of systemic fraud involving the diversion of Rs 975 crore in loan funds, originally allocated to Gensol’s electric vehicle subsidiary. The Ministry of Corporate Affairs (MCA), Securities and Exchange Board of India (SEBI), Serious Fraud Investigation Office (SFIO), and Reserve Bank of India (RBI) are all involved in the ongoing investigation.
Earlier this year, SEBI barred promoters Anmol Singh Jaggi and Puneet Singh Jaggi from the securities market and appointed a forensic auditor to examine the company’s books. The Indian Renewable Energy Development Agency (IREDA) also filed an insolvency petition against Gensol due to a loan default of ₹510 crore. Additionally, the company’s Chief Financial Officer, Jabirmahendi Mohammedraza Aga, resigned amid mounting regulatory scrutiny.
The NCLT’s interim order, based on findings by the MCA, SEBI, and SFIO, highlights violations of corporate governance norms and the potential for personal liability for the company’s directors under Section 339 of the Companies Act. The tribunal has barred the individuals and companies involved from selling, mortgaging, or transferring properties, securities, or valuables, and the next hearing is scheduled for June 3, 2025.
Due to ongoing governance and financial issues at Gensol Engineering, the company’s stock has declined by up to 94% from its peak. As a result, SEBI has placed Gensol shares under the Enhanced Surveillance Measure (ESM) Stage 2, which restricts trading to specific time windows during the day. This has led to severe liquidity issues, making it difficult for the general public and other investors to frequently trade or exit their positions, increasing the risk of being stuck with the shares.
Financials & Others
The company’s revenue rose by 52 percent from Rs. 227.13 crore to Rs. 345.34 crore in Q3FY24-25. Meanwhile, Net profit rose from Rs. 13.12 crores to Rs. 16.91 crores during the same period.
Gensol Engineering has a strong foundation in technical advisory services and has grown significantly over the years. The company currently boasts over 33,693 MW+ in its portfolio. In the trailing twelve months (TTM), it has reported a total revenue of Rs. 1,527 Crore and has an unexecuted order pipeline worth Rs. 7,000 Crore.
Written by Sridhar J
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