Rs 7,000 Crore Order Book: Gensol Engineering Limited Addresses Recent Credit Rating Downgrades and Outlines Strategic Debt Reduction Plan
The stock gave multibagger returns of over 1,500 per cent in 5 years and has delivered good profit growth of 52.1 per cent CAGR over the last 5 years.
Gensol Engineering Limited (GEL) has publicly addressed the recent credit rating downgrades issued by CARE and ICRA, attributing them to a temporary liquidity mismatch, which they assert is being rectified through incoming customer payments. While acknowledging the concerns raised by these downgrades, GEL categorically denies any involvement in falsification claims and has announced the formation of a committee to conduct a comprehensive review. This action emphasises the company's commitment to transparency, accountability, and robust business practices, aiming to restore stakeholder confidence.
Despite the current financial challenges, GEL highlights its strong growth trajectory, evidenced by an order book exceeding Rs 7,000 crore, providing substantial revenue visibility. The company's current debt stands at Rs 1146 crore against reserves of Rs 589 crore, resulting in a debt-equity ratio of 1.95. However, GEL has already reduced its debt obligation by approximately Rs 230 crore in the current financial year, demonstrating proactive debt management.
To further strengthen its financial position and achieve its goal of zero net debt, GEL has initiated a strategic deleveraging plan involving asset divestments. This includes the sale of 2,997 electric vehicles for Rs 315 crore and the sale of a wholly owned subsidiary for Rs 350 crore, which together are expected to reduce debt by Rs 665 crore, lowering the debt-equity ratio to 0.8. GEL assures that all proceeds from these divestments will be directly used to repay existing debt and working capital obligations, ensuring a focused and effective approach to financial stability. The company pledges to provide regular updates as it progresses towards its financial goals.
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Results: According to Quarterly Results, the net sales increased by 30 per cent to Rs 345 crore and a net profit increased by 6 per cent to Rs 18 crore in Q3FY25 compared to Q3FY24. In its nine-month results, the net sales increased by 42 per cent to Rs 1,056 crore, EBITDA increased by 89 per cent to Rs 246 crore and net profit increased by 34 per cent to Rs 67 crore in 9MFY25 compared to 9MFY24. Looking at its annual results, the net sales increased by 142 per cent to Rs 963 crore and a net profit increased by 129 per cent to Rs 53.5 crore in FY24 compared to FY23.
Established in 2012, Gensol Engineering has emerged as a significant force in India's renewable energy and electric mobility sectors. Specializing in solar EPC, advanced tracking solutions through its acquisition of Scorpius Trackers, and the development of battery energy storage systems and green hydrogen infrastructure, Gensol is driving the transition to sustainable energy. Complementing its renewable energy focus, the company operates a state-of-the-art EV manufacturing facility in Pune and provides comprehensive EV leasing services to a diverse clientele, solidifying its commitment to decarbonizing transportation. With over 770 MW of solar projects completed, Gensol's diverse portfolio and experienced team of over 500 professionals position it as a leader in the evolving energy landscape. 1
The company has a market cap of Rs 1,274 crore. The stock gave multibagger returns of over 1,500 per cent in 5 years and has delivered good profit growth of 52.1 per cent CAGR over the last 5 years.
Disclaimer: The article is for informational purposes only and not investment advice.