Once a rising star in the renewable energy and EV sector, Gensol Engineering Ltd. has witnessed a stunning fall in its stock price. From an all-time high of ₹1,124.90 in June 2024, the share has plummeted over 92% to ₹81.36 as of April 29, 2025. What caused this collapse? Here’s a breakdown of the key reasons behind this downfall and what investors need to know.
Business Model and Early Success
Founded in 2012, Gensol Engineering started as a provider of engineering, procurement, and construction (EPC) services for solar power projects. Over time, the company expanded into electric vehicle leasing and manufacturing, catching the attention of both retail and institutional investors.
In mid-2024, the stock hit its peak at ₹1,124.90, driven by aggressive expansion and market optimism. However, the tide turned quickly.
Major Reasons Behind the Stock Crash
1. SEBI Crackdown on Promoters
The turning point came in April 2025 when SEBI issued an interim order following allegations of fund diversion and share price manipulation. The report revealed that promoters Anmol Singh Jaggi and Puneet Singh Jaggi allegedly misused loans worth ₹978 crore, meant for EV purchases, for luxury real estate and other suspicious transactions.
Other serious findings included:
- Fake documents submitted to lenders
- Undisclosed reduction in promoter shareholding
- Misuse of company funds
SEBI barred the promoters from holding directorial positions and halted the company’s proposed stock split. It also ordered a forensic audit, leading to an erosion of investor confidence.
2. Complaints from Major Lenders
IREDA and PFC, two major public sector lenders, registered complaints against the company with Delhi Police’s Economic Offences Wing (EoW).
IREDA Allegations:
- Submission of fake documents
- Undisclosed sale of promoter stakes
- Account marked as “stressed”
PFC Findings:
- ₹633 crore loan sanctioned for 6,000 EVs
- Only ₹45 crore repaid out of ₹352 crore disbursed
- Allegations of fund diversion and misleading information
3. Regulatory Investigations Expand
The case attracted attention from other authorities:
- National Financial Reporting Authority (NFRA) initiated a probe into financial irregularities.
- Ministry of Corporate Affairs (MCA) started examining the company’s filings for potential fraud and violations of the Companies Act.
Timeline of the Stock Crash
| Date | Price (₹) | Event |
|---|---|---|
| 24 June 2024 | 1,124.90 | 52-week high |
| 23 April 2025 | 99.91 | Falls below ₹100 for first time |
| 24 April 2025 | 94.91 | New 52-week low |
| 29 April 2025 | 81.36 | Current price, down 92% from peak |
The stock has hit the lower circuit (5%) for 13 consecutive sessions.
Retail Interest Still Surging Despite Red Flags
Interestingly, retail investor participation rose even as the stock crashed:
- Retail shareholding increased from 23.44% in Dec 2024 to 30.68% in Mar 2025
- FIIs also showed initial interest but withdrew amid regulatory action
Financial Red Flags for Gensol Engineering
Several factors have made the company financially vulnerable:
- High Debt Levels: Mounting liabilities affected financial stability
- Weak Cash Flow: Delayed payments and fund misuse impacted liquidity
- Promoter Stake Reduction: Fell from 62.77% (June 2024) to 35.87% (March 2025), raising alarm
What Investors Can Learn
Watch Promoter Activity
Frequent stake sales and unusual transactions often signal deeper issues.
Monitor Company Debt
High leverage and inconsistent cash flow can threaten long-term viability.
Stay Alert to Regulatory Moves
Early SEBI or MCA investigations are critical red flags for any listed company.
Conclusion
Gensol Engineering’s fall from grace serves as a powerful reminder that due diligence and attention to governance are vital for investors. Despite early success, the combination of regulatory probes, financial mismanagement, and loss of promoter credibility has led to a massive erosion in shareholder wealth. Investors are advised to tread cautiously and prioritize fundamentals over hype.
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The information provided here is ai generated and for general information and educational purposes only. It is not intended to be personalized investment advice, nor should it be considered as a solicitation to buy or sell any security or financial product.
