Gensol Engineering Faces Stock Turmoil Following ICRA Downgrade

Gensol Engineering is currently experiencing a significant decline in its stock value, plummeting over 40% in just four days after a downgrade by the ratings agency ICRA. The reasons behind Gensol Engineering’s steep stock drop include the ICRA rating downgrade, governance issues, and more.

Background on Gensol Engineering

Gensol Engineering, based in Ahmedabad, is involved in solar EPC and electric vehicle leasing, known for its strong reputation in the solar EPC and operations & maintenance sectors. The company boasted over 30,000 pre-bookings for an electric car prototype showcased at the Bharat Mobility Expo.

Notably, the promoters of Gensol are also the founders of BluSmart.

Recent Financial Performance

In its Q3 results, Gensol reported a 30% increase in total revenues, amounting to Rs 345 crore compared to Rs 266 crore in the same quarter the previous year. However, market reactions were unfavourable due to a decrease in profit after tax, which dropped to Rs 6 crore from Rs 17 crore, resulting in further pressure on the stock price.

ICRA Downgrade and Governance Issues

The turmoil was ignited when ICRA downgraded Gensol’s credit rating from BBB- (Stable) to D (Junk/Default), signifying concerns about the company’s debt servicing history and its corporate governance practices. ICRA claimed the documentation provided by Gensol concerning its debt servicing was falsified, raising serious doubts about the company’s liquidity.

Furthermore, ICRA pointed out an increase in the promoter’s pledged shares, which escalated from 79.8% in September 2024 to 85.5% in February 2025. The agency also noted that BluSmart, the EV ride-hailing company associated with Gensol, had financial challenges, including a delay in payments on its Non-Convertible Debentures (NCDs). This situation could further hinder Gensol’s ability to raise funds due to the shared leadership.

Equity Infusion Delays and Debt Reduction Plans

The promoters had planned an equity infusion of Rs 244 crore in FY25 through preferential share warrants, of which Rs 140 crore has been invested thus far. However, the remaining Rs 100 crore funding has been postponed by approximately a year, deviating from initial expectations set by ICRA.

In an effort to manage the crisis, Gensol has proposed plans to cut its debt by Rs 665 crore, which includes:

• Rs 315 crore from the sale of around 3,000 electric vehicles
• Rs 350 crore from divesting its US subsidiary, Scorpius Trackers

The company currently has a debt of Rs 1,146 crore, following the repayment of approximately Rs 230 crore in the current financial year.

Leadership Reassurance and CFO Resignation

After the credit downgrade, Anmol Singh Jaggi, Chairman and Managing Director, appeared on various business news platforms, vowing that Gensol’s growth trajectory remains intact. He expressed confidence in restoring the company’s credit rating within three months while refuting any allegations of document falsification submitted to ICRA.

On a related note, Gensol has experienced leadership changes, with CFO Ankit Jain resigning for personal reasons. In response to this, Jabir Aga, who had previously resigned in October 2024, has been reinstated in the role.

Impact of Gensol’s Stock Fall on BluSmart

Claims that Gensol used shareholder funds to support BluSmart lack solid evidence, especially since the electric cab company successfully attracted investment at increasing valuations throughout 2023-24 without issues. Gensol attempted to separate its solar business from the financial risks associated with BluSmart but eventually faced challenges sooner than anticipated. This lack of effective crisis management places a dependable renewable energy venture at risk.

Recent Project Wins Under Scrutiny

Amidst this turmoil, Gensol’s recent successes, including 520 MW in two projects in Khavda from a PSU and 500 MW of battery energy storage projects from GUVNL, have come into focus. If financial difficulties persist without resolution, there is a risk of cancellation or intervention by agencies, further destabilising the markets.

With a rating of Default, Gensol currently cannot access financial institutions. Their immediate objective is to secure an upgrade to move out of Default status and commence tapping funding sources. This delicate situation has the potential to evolve in multiple directions.