Shares of Gensol Engineering tumbled 20% on March 4, 2025, hitting the lower circuit at ₹413.3 per share on the NSE. The stock plunged to its lowest level in 20 months following CARE Ratings’ downgrade of the company’s credit rating to ‘default’ from ‘BB+’.

Stock Crashes 80% from All-Time High

Gensol Engineering had reached an all-time high of ₹2,527.05 per share on October 12, 2023. From that peak, the stock has now plummeted 83.65%, wiping out significant investor wealth. The ongoing sell-off has intensified, with the stock losing 42% in just the last month and 46.44% year-to-date as concerns over the company’s financial health mount.

CARE Ratings Downgrade Triggers Panic Selling

The sharp decline was triggered by CARE Ratings’ downgrade of Gensol Engineering’s credit rating to ‘default’, citing delays in servicing term loan obligations. The downgrade raised fresh concerns over the company’s financial health, liquidity issues, and ability to meet debt obligations.

Major Lenders Express Concerns

The Indian Renewable Energy Development Agency (IREDA), Power Finance Corporation (PFC), Bandhan Bank, ICICI Bank, and HDFC Bank are among the major lenders reportedly monitoring the situation closely. The delays in debt servicing have raised alarms over Gensol’s financial stability, putting additional pressure on its stock price.

Investor Sentiment Weakens Amid Growing Uncertainty

The downgrade and the subsequent stock crash reflect weak investor sentiment, as market participants remain wary of companies facing liquidity crunches. Given the renewable energy sector’s reliance on financing and policy support, investors are cautious about exposure to companies with high debt burdens and repayment issues.

What’s Next for Gensol Engineering?

Market experts suggest that the company's ability to secure fresh funding and restructure its existing debt will be crucial for its recovery. Any potential positive developments, such as new contracts, government policy support, or debt restructuring agreements, could help stabilize the stock.

However, if liquidity issues persist, further downgrades and stock declines cannot be ruled out. Investors are advised to closely monitor management’s response, upcoming financial results, and any potential announcements regarding loan repayments or fundraising efforts.

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