55% decline in March so far! Gensol Engineering shares shed 4% following multiple bulk deals

Shares of Gensol Engineering fell 4 percent on Thursday, March 20, following multiple bulk deals on March 19. The stock, which hit its 5 percent upper circuit in the previous session, has been under heavy selling pressure, closing in the red in 16 of the last 17 sessions.

Gensol Engineering saw significant trading activity on March 19, with a series of bulk deals taking place. Cinco Stock Vision LLP purchased 3,00,000 shares at a weighted average price of ₹224.90.

On the selling side, KLJ Plasticizers Limited offloaded 3,00,000 shares at ₹248.50, while M M Ceramics and Ferro Alloys sold 2,05,000 shares at ₹231.30. Mansi Share and Stock Advisors Pvt Ltd participated as both a buyer and seller, selling 2,20,093 shares at ₹224.91 and buying 54 shares at ₹244.91. Additionally, Virtue Financial Services Private Limited sold 2,00,000 shares at ₹224.90.

The trading activity revealed a mix of buying and selling interest, with prices ranging from ₹224.90 to ₹248.50, highlighting varied investor sentiment towards the stock.

Stock Price Performance

Following the bulk deals, the stock fell 4 percent to its intraday low of ₹238.00. The stock is now 79 percent below its all-time high of ₹1,125.75, recorded in June 2024. It also recently hit its 52-week low of ₹224.45 during the previous session.

The stock has shed over 55 percent in March alone, marking its fourth consecutive month of losses. It dropped more than 27 percent in February, 2.5 percent in January, and over 5 percent in December. Over the past year, the stock has lost more than 70 percent of its value, significantly eroding investor wealth.

Financial Woes and Management Concerns Weigh on Sentiment

Investor confidence has been rattled by Gensol Engineering's ongoing delays in servicing its term loan obligations. The company is also facing allegations of falsifying debt servicing documents, which triggered credit rating downgrades from ICRA and CARE.

Adding to the negative sentiment, the company's Chief Financial Officer (CFO) resigned, further unsettling investors. In an effort to strengthen its financial position, Gensol announced a series of measures, including fundraising initiatives. On March 13, the board approved raising ₹400 crore through the issuance of Foreign Currency Convertible Bonds (FCCBs) and ₹200 crore via the issuance of warrants to promoters.

To reduce its debt burden, Gensol also announced asset sales, including the divestment of 2,997 electric vehicles worth ₹315 crore and the sale of a wholly owned subsidiary for ₹350 crore.

Promoters Unlock Liquidity to Reinvest in Business

The promoters recently sold approximately 2.37 percent of the company’s total equity, amounting to 9,00,000 shares, to unlock liquidity. Gensol stated that the proceeds would be reinvested into the business through equity infusion, aiming to bolster the company’s balance sheet and enhance stability.

The company assured that the promoters would reinvest the entire proceeds from the sale, or potentially more, during the warrant subscription round scheduled for June 18, 2024, ensuring additional growth capital. Following this transaction, the promoters now hold a 59.70 percent stake in the company.

Looking Ahead

In a separate filing, Gensol disclosed plans to consider a stock split and explore additional fundraising options, including equity issuance, FCCBs, and other financial instruments, during its upcoming board meeting on March 13.

Established in 2012, Gensol Engineering is the flagship company of the Gensol Group, specializing in engineering, procurement, and construction (EPC) services for the solar power sector. The company was listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) in 2023.

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