Shares of Gensol Engineering continued to decline for the tenth straight session on March 10. The stock has declined by over 47 per cent between February 21 and March 10. The stock continued to extend its losing streak following a stake sale by the promoters of the company.
Notably on March 10 the stock recorded a new 52-week low and was locked at the lower circuit limit as it declined 5 per cent to trade at Rs 305.8 apiece on the NSE. Here’s a look at some of the key factors which have led to the drastic decline seen in the stock’s price:
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Promoters Offload 9 Lakh Shares
The company informed the exchanges on March 7 that its promoters have sold approximately 2.37 per cent of the total equity shares of the company. Notably the 2.37 per cent stake translates to 9 lakh shares.
The company added that the stake sale has been undertaken to unlock liquidity which will be reinvested into the business through equity infusion. Gensol stated that the stake sale is part of a strategy aimed at reinforcing the company’s balance sheet and supporting stability. The shareholding of the company reduced to 59.7 per cent stake following the stake sale.
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Credit Rating Downgrade
Earlier on March 5 the company informed the exchanges about its credit ratings getting downgraded. The Investment Information and Credit Rating Agency (ICRA) downgraded Gensol’s credit ratings of loan facilities amounting to Rs 2,050 crore. On March 4, Gensol Engineering’s CARE Ratings for bank facilities totalling Rs 716 crore were downgraded to CARE D. Typically such downgrades are a sign of heightened credit risk and financial distress.
However, the company stated that the downgrades happened due to a short-term liquidity mismatch. The company added that it denies any involvement in the falsification of claims and will set up a committee to comprehensively review the matter.
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“Gensol Engineering Limited (GEL) acknowledges the recent credit rating downgrades by CARE and ICRA. The rating downgrade happened due to a short-term liquidity mismatch which is improving by way of customer payments. That said, we understand the concerns these downgrades have raised and are committed to addressing them responsibly to all our stakeholders,” the company said.
Resignation of CFO
Gensol Engineering informed the exchanges on March 6 that Ankit Jain, the Chief Financial Officer and Key Managerial Personnel of the company resigned from his post. The company added that it has appointed Jabir Mehndi Mohammed Raza Aga as the Chief Financial Officer and Key Managerial Personnel of the Company with effect from March 07.
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Gensol Engineering Ltd shares have declined nearly 70 per cent on the NSE in a year. The stock has declined over 59 per cent Year-To-Date (YTD). In six months the stock’s price has fallen by over 67 per cent. In a month the company’s shares have fallen by more than 58 per cent.
