members help me to clear my doubt
Thanks in advance
MD of Gensol engineering is continuously saying he will infuse money in gensol eng through warrants so the previous warrants price is 850 odd rs and currently share price is 50-60% below that price so my question is will the promoter entity will convert that warrants into shares by paying remaining 75% or 600 Rs per share
Or they can launch new warrants to himself at current market price ( 300 Rs per share) and then convert their warrants into shares? If it is allowed by regulations? Which option they have to choose?
Thanks.
My main point of question is if they are allowed to announce new warrants round to promoters while their previous warrants are still pending.
Sorry if it seems a noob question
Warrants somewhat work like options. If the share price is trading above the exercise price of the warrant, then only does it make sense for the promoter to convert the warrant into shares. At present, they are trading way below the exercise price. They will face a loss if they convert warrants to shares at this price. They will let the warrants expire worthless. That what I understand. Anyone with a better explanation can chip in.
Thanks for your valuable inputs mate.
But my main question was Can they (promoters entity) create new warrants for themselves while previous warrants are still active and pending for conversion ( previous warrants expiry date is December 2025)
Biggest lender to Gensol is IREDA and it says loan is due since 2 months. Promotor Jaggi knew this will blow up and sold 2 lakh shares last month Feb 18th at Rs. 533. Today the price is down to Rs.320
CFO resigned as a scape goat for falsified accounts presented to lenders. Same day new CFO appointed.
Disc: Invested and reluctant to sell as already 60 percent loss. Board meeting on 13Mar next thursday to consider and approve Fund raising/Stock split.
Fund raising I understand. Is it even necessary to discuss a stock split at this time? Who are they trying to fool? The developments seems to be getting worse day by day.
Yes they can issue more warrants if they want even if they have existing warrants to convert
Mostly existing warrants wonāt be converted as it doesnāt make any sense for them as stock is currently 1/3rd of that price but they will loose on the 1/4 amount they already paid if they donāt convert them
I exited some portion of my investment last week to do some tax loss harvesting but still hold major portion of it
I knew they had CG issues but never imagined things will blow out like this
Still I donāt understand why they repaid 230cr back when they are so thight with cash that they canāt even pay 20cr per month I guess they have not anticipated the delay in payments from clients thatās the only argument that makes sense to me
Anyways I am holding on to this for long term still as I think biz is fundamentally strong and they can make a comeback if they can get rid of the leasing biz in next one year as their solar biz is pretty strong
I never understood how people would be trapped in plays like Yes Bank, DHFL, and many others, averaging at Lows, etc.
I used to invest at that time but never used to track markets daily. Now I am seeing it real time with this.
Sunk Cost Fallacy is a dangerous mindset.
I am not surprised at the selling; I am amazed at the buying. Who is buying at this point? Why? Itās absolutely strange behavior when Rating agencies say youāre a defaulter; maybe you have provided fraud documents, and the CFO resigns and may be proving the allegations.
Every year new investors come to the market and think this time itās different and itās cheap because its fallen 80% how much it can go more from here ā¦then it falls 80% from thereā¦
First Denialā¦then finding reasons defending the companyā¦ then more smoke comes outā¦then trying to find factsā¦then story becomes uglyā¦then acceptanceā¦booking lossā¦ and thenā¦realization and lesson learned ā¦ then move onā¦
As they famously say History doesnāt repeat itselfā¦It rhymesā¦ isnāt itā¦
Well said, infact it is amazing to see vp forum members pointing out various red flags even though company was hot in social media space as a potential multibagger
For the folks who are already invested and finding it hard to exit due to lossā¦ Many a times in the past capital preserved is capital gained
Forget the anchor bias and take a rationale callā¦ Even if itās a mistake, learn from the mistake and move on, never invest/stay invested based on greed of high returns/holding to sell at higher levels
If still there is a conviction to hold stock, please do so after a thorough analysis.
Did the management walk the talk in the past, thatās pertinent questionā But if not, even if itās tough pill to swallow, book losses, gain knowledge and move on
Getting Out of the Swamp Early or later doesnt matterā¦a swamp is swamp till clarity emerges ā A Lesson from My Journey
Sharing my experience, just to reaffirm my decision but also if it helpful to someone.
Journey began in 2022 with media and packaging stocks. It wasnāt even a corporate governance issue, yet I spent days and nights searching for positives, building hope as prices kept fallingā¦ Even praying for a company at times.
When clarity is absent and still far away, cutting losses frees up capital for better opportunities and provides mental clarity, preventing emotional attachment to a sinking investment. (In my case, losses in certain names had reached -55%) and when the clarity emerges one can always reenter.
How retail investors try to build positivity:
Take the case of a lighting company that recently moved to the mainboard. Retail argues: āAs per the promoter, growth is hugeā¦ Even though we donāt understand their foreign entity business or revenues, maybe he prioritizes growth over corporate governance and doesnāt see the need for control now.ā
Gensol Engineering Promoters undertake sale of shares to unlock liquidity and reinvest in business.
The promoters have sold approximately 2.37% of total equity shares of the company,
amounting to 9,00,000 shares, to unlock liquidity that will be reinvested into the business through equity infusion. This step is part of a strategy aimed at reinforcing the companyās balance sheet and supporting stability.
Further underscoring their commitment, the promoters will infuse the same amount
received through this sale or more amount in the warrant subscription round executed on
June 18, 2024, thereby providing additional growth capital to the company.
=======
Above statement by promoters about warrants is reassuring because it is at a price of Rs.870 whereas today price is 320
Keeping a little hope !! Will they walk the talk !!
Warrants are additional shares issued to raise capital for internal purposes
But unlike preferential shares where full amount has to be paid upfront.
With warrants the subscriber can pay 25% upfront and remaining in next 18 months if he things company is moving in the direction intended but if he doesnāt pay the remaining amount his warrants expire and he wonāt get the shares and that 25% is lost
In gensol case they issued around 50 lakhs warrants some 9 months back at price around 900 I guess so in that promoters subscribed to 15 lakhs shares so they had to pay 130cr in total ( 15lks *900) to convert warrants into shares
They paid the 30cr+ which is 25% of value and subscribed to warrants but 75% remaining is yet to be paid
But obviously in present scenario itās better to lose that 25% and buy from open market as share price is just 300 but if they convert warrants they pay double that amount
If they convert the above warrants that shows their commitment to infuse liquidity and take company further
If subscribers convert warrants to shares that money comes into company books
But if you buy or sell in open market that money doesnāt come to company books
They are selling shares in market and brining money into books to repay loans thatās what they intimated in exchange too letās see if they walk the talk now
Promoter has majority stakes in three companies gensol blusmart and matrix gas combined has market cap of 9000cr at peak and all the companies are growing 60-100% YOY since last 3-4 years
But people in social media think he is fooling retail by coming on TV and making fake promises to sell shares worth 25cr and run to Dubai and lose that 4500cr ( assuming 50% stakes in each company )
Not even sure how negative sentiments can ruin the thought process
But like above members mentioned itās a risky bet now and there could be bigger things that can come out but ln any case I think promoter has much more to loose than retail so he will turn this around thatās what I think
