Gensol Stock Crashes 87%; SEBI Investigates Fund Misuse

Shares of Gensol Engineering have faced a significant blow in recent weeks. On April 16, the stock was locked in the 5% lower circuit for the second consecutive day. This dramatic fall has extended the company’s losses to 87% over the past year. As the stock struggles to maintain its value, the Securities and Exchange Board of India (SEBI) has investigated the company’s financial activities. The market regulator found that Gensol and its promoters were involved in the misutilization and fraudulent diversion of funds.

Let’s take a closer look at what’s happening with Gensol and why its stock has suffered such a steep decline.

Gensol's Decline and SEBI's Investigation

Gensol’s stock hit a 52-week low of Rs 122.68 on April 16, 2025. Over 4.2 million shares were traded at this price, adding to the concerns surrounding the company. The stock has fallen sharply, especially since last week, when SEBI raised alarms about potential financial mismanagement.

The market regulator found that Gensol had misused funds and diverted money fraudulently. Specifically, Gensol took loans worth Rs 663.89 crore from the Indian Renewable Energy Development Authority (IREDA) and Power Finance Corporation. These funds were supposed to be used to purchase electric vehicles as part of the company's green energy initiatives. However, a large portion of the capital, approximately Rs 262.13 crore, remains unaccounted for.

As a result of these findings, SEBI has appointed a forensic auditor to examine Gensol’s financial books. The regulator has also suspended the promoter brothers, Anmol Singh Jaggi and Puneet Singh Jaggi, from holding any directorial or key positions in the company. Moreover, SEBI has banned the company and its promoters from accessing the securities market until further notice.

Gensol's Financial History

Despite the current issues, Gensol Engineering had previously shown significant growth. Initially listed on the BSE SME platform in 2019, the company moved to the main board in July 2023. Over the past few years, Gensol’s financials reflected a positive trend. For the nine months ending December 2024, Gensol's consolidated revenue rose to Rs 1,053 crore, up from Rs 740.98 crore in the same period the previous year. Similarly, its net profit grew to Rs 67.5 crore from Rs 49.8 crore.

However, despite these positive financial results, the ongoing investigation and allegations against the company have severely impacted its stock. Investors are now concerned about the company's future and ability to recover from these regulatory challenges.

The Stock Split Controversy

In addition to the financial scandal, Gensol had announced a 1:10 stock split, which was intended to make its shares more affordable to a larger group of investors. However, SEBI has intervened and ordered the company to put the stock split on hold until further notice. This is another setback for Gensol, as the stock split was expected to attract more retail investors.

Gensol's 87% Loss: A Wake-Up Call for Investors

The 87% decline in Gensol's stock over the past year is a cautionary tale for investors. While the company had been showing strong growth, recent allegations of fund mismanagement and SEBI's intervention have raised serious concerns about its future.

For investors, this crash reminds them of the risks associated with investing in companies with questionable corporate governance and highlights the importance of regulatory oversight in maintaining market integrity. SEBI’s investigation into Gensol’s financial practices is crucial to determining whether the company can recover or if further action will be taken.

What’s Next for Gensol?

The future of Gensol Engineering now hinges on the findings of SEBI’s forensic audit and any subsequent actions the regulator may take. If the company is found guilty of misusing funds, it could face further sanctions, which would likely significantly impact its stock price. On the other hand, if the company manages to clear its name and resolve the issues, it may have a chance to regain investor confidence and recover from the financial setback.

However, Gensol's recent plunge in share prices suggests that it may take some time for the company to regain its footing in the market.

Conclusion

Gensol Engineering’s stock has taken a significant hit, falling 87% in the last year, as SEBI investigates the company's alleged misuse of funds. The regulatory probe into the company’s financial practices has cast a shadow over its future, and its stock continues to struggle. As SEBI progresses with its investigation, it remains to be seen whether Gensol can recover or if further action will be necessary.

For now, investors should proceed with caution. Gensol's situation is fluid, and the company’s ability to navigate these challenges will determine its future in the market.

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