Gensol Engineering has been experiencing a continuous decline in its stock value, hitting a 5% lower circuit at Rs 261.70. This downward trend has persisted for thirteen consecutive trading sessions, marking a significant drop from its previous high.
Stock Performance Overview
Over the last thirteen sessions, Gensol Engineering’s shares have lost 54.85% from their recent closing high of Rs 579.60 on 21 February 2025. The stock has now plummeted by 76.75% from its 52-week high of Rs 1,125.75, recorded on 26 June 2024. The stock’s 52-week low of Rs 261.70 was reached today, reflecting the continued investor sell-off and loss of confidence.
Credit Rating Downgrade Impact
The major catalyst behind the recent downfall was the downgrade of the company’s credit rating. The rating agency downgraded Gensol’s long-term bank facilities worth Rs 639.70 crore from CARE BB+ (Stable) to CARE D. Additionally, its long-term/short-term bank facilities of Rs 76.30 crore were downgraded from CARE BB+ (Stable) / CARE A4+ to CARE D / CARE D. This downgrade signifies an increased risk of default, raising concerns over Gensol’s ability to manage its debt obligations effectively.
Technical Analysis and Resistance Levels
From a technical perspective, the stock’s daily Relative Strength Index (RSI) stood at 12.859, indicating extreme oversold conditions. The RSI, which oscillates between 0 and 100, considers a stock overbought when above 70 and oversold when below 30.
Moreover, the stock is currently trading below its crucial 50-day, 100-day, and 200-day Simple Moving Averages (SMA), which are placed at 622.65, 705.42, and 823.53, respectively. These levels serve as key resistance zones that Gensol Engineering must surpass for a potential recovery.
Corporate Actions: Stock Split and Fundraising Plans
On 13 March 2025, Gensol Engineering’s board approved a stock split, converting one share of Rs 10 into ten shares with a face value of Rs 1 each. The record date for this split will be announced after shareholder approval. The stock split aims to enhance liquidity and make the shares more affordable for retail investors.
The board also approved fundraising initiatives amounting to Rs 600 crore to strengthen the company’s financial standing. The company plans to raise Rs 400 crore through the issuance of Foreign Currency Convertible Bonds (FCCBs) and Rs 200 crore through the issuance of warrants to promoters. The warrants will be priced at Rs 56 per share after adjusting for the stock split. This initiative is expected to improve financial stability and attract new investors.
Debt Reduction and Financial Restructuring
Currently, Gensol Engineering holds a debt of Rs 1,146 crore against reserves of Rs 589 crore, resulting in a debt-equity ratio of 1.95. The company’s financial restructuring plan, which includes the Rs 600 crore fundraising along with divestments worth Rs 615 crore, aims to reduce debt significantly. Post-execution, reserves are projected to increase to approximately Rs 1,200 crore, while the company’s debt will be brought down to Rs 530 crore. Consequently, the debt-equity ratio is expected to improve to a much healthier 0.44.
Market Outlook and Future Prospects
Investors will closely monitor Gensol’s execution of its restructuring and fundraising plans. While the company is taking significant steps to restore financial health, market sentiment will depend on how effectively it manages debt, improves liquidity, and rebuilds investor confidence. Short-term volatility may persist, but long-term prospects hinge on successful implementation of these strategic initiatives.
