Gensol tumbles another 5% on Sebi crackdown; stock down 84% this year

Shares of Gensol Engineering hit the 5 per cent lower circuit for the 16th consecutive session on Thursday, as the stock found no takers after the market regulator barred the founders from the securities market over alleged fund diversion.

 

In less than two weeks, over 70 per cent of its market value has been wiped out, according to Bloomberg. This comes after the stock surged over 200 per cent since its listing to its peak in early 2024. 

 

The stock hit the 5 per cent lower circuit for the 16th session on Thursday to an intraday low of ₹116.5 per share. From its peak of ₹1,376 apiece in early February, the stock has fallen by nearly 90 per cent. The stock has tumbled 84 per cent this year, compared to a 1 per cent fall in the benchmark Nifty 50. Gensol Engineering has a total market capitalisation of ₹446.53 crore.

 

Fresh Trigger

 

In a latest development, Arun Menon has tendered his resignation as the independent director of the firm, with immediate effect. On Tuesday, the Securities and Exchange Board of India (Sebi) barred Anmol Singh Jaggi and Puneet Singh Jaggi, promoters and directors of Gensol Engineering, from the securities market, allegedly for diversion of funds and fraudulent practices. 

 

Further, the markets watchdog directed Gensol Engineering to put on hold the stock split announced by it. Sebi said that the funds were used for luxury real estate, complex fund routing, and alleged misuse of public company money as if it were a private purse. 

 

How did the story unfold?

 

Sebi started scrutinising the case after multiple complaints and subsequent downgrades of Gensol's credit ratings by CARE Rating and Icra due to delays in servicing debt obligations by BluSmart Mobility, a related party of Gensol.

 

In a 29-page interim order, Sebi said, "The prima facie findings have shown mis-utilisation and diversion of funds of the company (GEL) in a fraudulent manner by its promoter directors, Anmol Singh Jaggi and Puneet Singh Jaggi, who are also the direct beneficiaries of the diverted funds".