Gensol Engineering: From Dream Run To Free Fall – Here’s What Went Wrong

Gensol Engineering shares are in free fall, with no signs of bottom in sight. The solar stock has been falling for the previous 13 straight sessions, having crashed 54.72 per cent. Over the last month, it lost 56.36 per cent. If an investor had invested Rs 1,00,000 in the stock on February 13, their investment would now be worth just Rs 43,635.

From its all-time high of Rs 1,376, hit just one year ago on February 20, 2024, the stock has fallen about 81 per cent. In other words, if an investor had bought Rs 1,00,000 worth of shares at the peak would have seen their investment shrink to only Rs 19,000.

In the meantime, Foreign Institutional Investors (FIIs) have been aggressively cutting down their stakes. FIIs trimmed their stakes from 2.30 per cent during the September 2024 quarter to just 0.63 per cent in the December 2024 quarter. Domestic Institutional Investors (DIIs), on the other hand, only started entering the stock in the previous December 2024 quarter, holding 1.37 per cent stakes.

While FIIs trimmed their stakes, majorly retail investors continued showing interest in the stock, which is evident from the increasing number of shareholders over the past few quarters, as shown by the shareholding pattern on the National Stock Exchange (NSE).

Gensol’s Dream Run

Gensol’s aggressive bull run from the start of 2022 to February 2024 has been nothing short of a dream for many investors. From quoting a price of Rs 36 around the start of 2022, the stock rallied almost one-way up to Rs 660 by September 2022. Investors who took entry early on early saw their wealth grow over 18 times.

Post that, it entered a nine-month consolidation phase, gradually descending to lows of Rs 260, the same level as it is trading currently. From this level, it again started its bull run, climbing all the way up to its record high of Rs 1,376 in a span of eight months, turning more than 4x. Overall, from Rs 36 till Rs 1,376, it ran a jaw-dropping 3,722 per cent, or in other words, increased investors’ wealth by 38x.

However, as the saying goes, what goes up must come down. Gensol now seems to be in a free-fall mode, and it’s uncertain where the bottom will be.

Retail Investors Rush

All this while, retail investors started entering the stock. According to the shareholding pattern on the NSE, the number of resident individuals holding shares worth up to Rs 2 lakh grew from 19,403 on December 31, 2023, to 91,015 on December 31, 2024. The number of shares held by these investors cumulatively grew from 51.93 lakh to a little over 89 lakh.

It is worth noting that during this period, Gensol also issued bonus shares in the ratio of 2:1 in October 2023, meaning two additional shares for every one held. Prior to this, it had issued its first bonus shares in the ratio 1:3 in October 2021, meaning one additional share for every three shares held. This increased the company’s total number of shares.

As of the December 2024 quarter, retail investors held 23.44 per cent of the company’s total paid-up equity, increasing their stakes from 13.71 per cent in the December 2023 quarter.

Resident individuals who had investments in excess of Rs 2 lakh also trimmed their stakes to half, from holding 13.94 per cent in December 2023 to 7.10 per cent in December 2024.

Juggling Jaggi: Promoters Sell, And Buy Again

Not just FIIs and high net worth individuals, but promoters of the company too offloaded their shares. Prior to the recent crash in the stock, Anmol Singh Jaggi, the firm’s CMD, had sold 2.15 lakh pledged shares worth Rs 11.46 crore in February 2025.

During the period from CY 2023 to CY 2024, the promoters of the company, including Anmol Jaggi, reduced their ownership in the business from 64.67 per cent to 62.65 per cent.

Also, as per the company’s exchange filing dated March 7, 2025, the company’s promoters sold 2.37 per cent of the company’s stakes, vowing to infuse “the same amount received through this sale or more amount” via warrant subscription. The promoters branded it as a financial “strategy” aimed at “reinforcing the company’s balance sheet and supporting stability.”

Following this transaction, the promoters’ holdings were further reduced to a 59.70 per cent stake.

Later, on March 10, the promoters announced that they had infused Rs 29 crore into the company by converting warrants into equity. According to a filing with the stock exchanges, the warrants will be converted into 4,43,934 equity shares at a price of Rs 871 per share.

What Went Wrong?

Majorly, four events created havoc in its shares.

1. Revenue Guidance Cut: First, the company's Chief Managing Director (CMD), Anmol Singh Jaggi, revised the firm's revenue guidance for FY24, reducing it by 33 per cent from Rs 1,500 crore to Rs 1,000 crore.

2. Hawala Connection: On top of this, Gensol got caught up in a legal issue when the Enforcement Directorate raided Dubai-based hawala operator Hari Shankar Tibrewala, who had strong ties to the company through his firm Zenith Multi Trading DMCC. Tibrewala was allegedly connected to an illegal betting case, and there were reports suggesting that Gensol's stock price might have been artificially inflated by market operators, raising further doubts about the company’s reputation.

3. Credit Rating Downgrades: The third reason is the recent one. Earlier this month, on March 3, Care Ratings downgraded the company's bank facility rating from BB+ to D. Following this, the stock plummeted 20 per cent the next day, hitting the lower circuit limit. The rating was downgraded "on account of ongoing delays in the servicing of term loan obligation as per feedback from its lenders," Care Ratings said.

A day later, ICRA too downgraded its credit rating from BBB- to D. Apart from delays in debt servicing, ICRA cited concerns over documents provided by the company regarding its debt servicing track record, which appeared to be "falsified." This raises concerns about its corporate governance practices, including its liquidity position, ICRA said.

ICRA also noted a decline in the company’s financial flexibility, with the promoter increasing their share pledge in the company to 85.5 per cent in February 2025, up from 79.8 per cent in September 2024. This rise in share pledging, along with falling share price, could make it harder for the company to raise capital for future growth, the rating agency said.

4. CFO’s Resignation: The fourth setback to the company came after its chief financial officer (CFO) Ankit Jain resigned from the company.

The Big Picture

All these events, cumulatively worked in the dramatic decline in the stock’s value, shrinking it by more than five times its all-time high price, or nearly 81 per cent.

While these developments may make the stock seem like a potential bargain at its current price, it serve as a reminder to retail investors of what can go wrong in the business of investing.

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