Gensol Engineering Stock Crash 30% in 2 Days, Know the Reason

Gensol Engineering Stock Crash 30% in 2 Days after the recent credit rating downgrades by CARE and ICRA. CARE Rating downgraded the company’s long-term and short-term bank facilities because of delays in servicing its term loan obligations.

CARE Rating:

• Long-term bank facilities of the company worth Rs 639.70 crore to CARE D from CARE BB+; stable.
• Long Term / Short Term Bank Facilities Worth Rs 76.30 Crores to CARE D from CARE BB+; stable.

ICRA Rating:

• Long term – Fund-based term loan facilities of the company worth Rs 925 crore to [ICRA]D downgraded from [ICRA]BBB- (Stable).
• Long-term – Fund-based cash credit of the company worth 718.50 Crores to [ICRA]D downgraded from [ICRA]BBB- (Stable)
• Long-term and short-term – BG of the company worth 406.50 Crores [ICRA]D / [ICRA]D downgraded from [ICRA]BBB-(Stable)/[ICRA]A3

Gensol Engineering Limited (GEL) acknowledges the recent credit rating downgrades by CARE and ICRA. The rating downgrade happened due to 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 also said that they has reported strong growth in key financial parameters across the board.

1. Order book of more than INR 7000 Cr. imparting significant revenue visibility
2. Total Revenue has grown by 42% to INR 1,056 Cr. in 9M FY25.
3. EBITDA has grown by 89% to INR 246 Cr. in 9M FY25
4. PAT has grown by 34% to INR 67 Cr. in 9M FY25

The Company said, “These are challenging times, and we are taking decisive steps toward strengthening our financial position and ensuring long-term financial stability. Below is a short summary of our current debt profile and key action items:

Current Debt:

1. In GEL standalone, the current fund-based capital limit for Solar EPC stands at INR 249 Cr.
2. In GEL standalone, the term loan for EV vehicles stands at INR 645 Cr.
3. In the EV leasing subsidiary company, the current term loan stands at INR 252 Cr.
4. The total current debt stands at INR 1146 Cr. against the reserves of INR 589 Cr. making it a debt-equity ratio of 1.95
5. In the current financial year, we have reduced our debt obligation by ~INR 230 Cr.

Strategic Deleveraging: We have initiated a series of asset divestments to significantly reduce our debt:

1. The sale of 2,997 electric vehicles worth INR 315 Cr.
2. The sale of a wholly owned Gensol subsidiary company for INR 350 Cr.
3. As a result of these two divestments, our debt will significantly reduce by INR 665 Cr. resulting in a debt-equity ratio of 0.8.