Gensol Engineering Share Price Declined 10% Amid Debt Reduction Efforts

Market Performance

Gensol Engineering share price continued to face significant downward pressure, falling by another 10% on March 6, 2025. The stock reached a new all-time low of ₹334.80, marking the second consecutive session locked at the lower circuit limit. Following recent adjustments in credit ratings, the company's stock has experienced a total decline of 35% over the last three trading days.

Main Developments

In response to recent credit rating changes, Gensol Engineering announced that it is undertaking several steps to decrease its existing debt. The company disclosed plans to generate funds through asset sales to lower its total debt from the current level of ₹1,146 crore. The organization reported reserves of ₹589 crore, resulting in a debt-equity ratio of 1.95.

Gensol Engineering acknowledged the credit downgrades and attributed the situation to a temporary liquidity mismatch, which the company indicated was gradually improving through client receivables. Furthermore, the company addressed ongoing concerns regarding allegations of falsification by establishing a committee to investigate the matter and reaffirmed its commitment to operational transparency.

Company Financial Overview

Gensol Engineering shared details regarding its financial performance for the first nine months of the ongoing fiscal year, reporting:

• Revenue: ₹1,056 crore (42% growth)
• EBITDA: ₹246 crore (89% increase)
• Net Profit: ₹67 crore (34% growth)

The company also indicated that during the current financial year, it has successfully reduced its debt by ₹230 crore. As part of its ongoing debt management strategy, Gensol Engineering is executing a series of asset sales, including:

• The sale of 2,997 electric vehicles, valued at ₹315 crore.
• The divestment of a wholly owned subsidiary is expected to generate ₹350 crore.

These transactions are projected to reduce total debt by ₹665 crore, aiming to improve the debt-equity ratio to 0.8.

Summary

Gensol Engineering's stock has declined significantly following recent credit rating downgrades and ongoing debt management challenges. The company has communicated its strategy of reducing debt through asset sales while addressing liquidity concerns and reaffirming its commitment to transparent operations. Despite these actions, the stock's recent performance highlights the impact of financial pressures on its market value.