Gensol is 80%+ down from ATH and now available at a PE of 8.5.
Gensol’s traded volume as sky rocketed throughout March, 7th March saw almost 30x of daily average volume while maintaining average delivery% of last 1 year.
Even in last 10 days, average volume traded is greater than 5x of average volume… a part of this volume can be attributed to pledged shares being sold, but who is buying? May be someone buying Gensol for a mouth watering valuation and may be get a new management to turn around things?
When will this bloodbath end in Gensol? may be another month?.. that may bring Gensol to a PE of 3-4 and then if someone buys a majority stake in this bumper sale and gets some capital to repay debt and gets a new management… this would be super cheap buy if it falls down to a PE of 3-4x before results.
Also results would give a good indication of impact of cash flow on business operations. Considering all this drama unfolded in start of March, if they are still able to achive revenue of 375cr & PAT of 20Cr (and actual realization of cash also happens), it would be a risk worth taking then.
Disclaimer : Had less than 2% PF allocation in Gensol, exited on 3rd day of LC’s. Will be interested to buy if it comes to double digits.
Heard somewhere that if you buy a stock because it went down by 80% from ATH and then it falls further 10%, which is always possible, it is 50% loss for you…
(Rs 100 stock goes to Rs 20 when you buy, then it becomes Rs 10, you lost 50%) ..seems like good fit for Gensol. Frightening maths..
Lesson : Never buy a stock just because it went down by x%, as it can quickly go down further
Not saying to buy because it went 90% down. Saying it can be a good buy because of high volume of shares traded. Quite possible some1 may overtake the company at this valuation and revive the company.
Will come to know holding pattern with Q4 results published.
Also, what is happening with Gensol is a case of too high aspirations, putting hands into too many things with over leveraging. If they keep getting business and keep delivering it (if they manage to deliver then definitely cashflow management would be taken care off), then sooner or later they may get out of this mess.
Plus, everyone has a different investing style. Some people keep a small % of their portfolio for such risky bets.
There is value in buying when companies are available at cheap prices due to X,Y, Z reasons. eg: Vedanta at 80-100…
Then there is investing in a complete black box where you cannot exit. eg: Yes Bank. JP Associates etc.
How do you think operations will run without cash. In a EPC business working capital is everything. You are quite literally dead if you don’t have working capital
P/E is no longer the measure to look if taking a call on entering. The P/B is close to 1 (today 1.1) and will fall further as lenders seem to be trying to exit with their huge quantity of invoked shares.
Grape wine says Refex deal was cancelled as Gensol wanted to sell to Uber. This is speculation until confirmed. If Refex backed-out then it impacts adversely. The more negative news will be if any customer cancels and order book starts to melt.
The next EGM is on 12Apr still 2 weeks away. The key agenda is approve to infuse 200 crores by way of warrants by promoter. If that key step happens only then there is some hope. Until then things could be volatile.
And their other pipelines deal of asset sale of trackers also is fishy, since they haven’t shared details of potential buyers , so gensol is stuck without cash and working capital
And in absence of working capital, it ilis going to be difficult for them to survive , if they don’t get cash, either it’s a potential takeover candidate or company gets dragged to insolvency by lenders.
Better to take a fresh look at it, when and if it’s taken over or it finds working capital.
Just thinking out loud and this understanding may be completely wrong, so even if their 86% share pledge is sold out in worst case scenario, they may end up having 9% equity together with no or very low debt (because loans were granted with shares as pledge). Presuming they can repay their debt service on time for next three months from operational cash and equity infusion thereby getting a rating upgrade and getting access to working capital lines, they can be in a better/recovery mode. Ofcourse 9% is very less, but still something. Did I miss anything?
Gensol was leasing the vehicles to BluSmart and was hoping Refex would buy the EV’s from them and lease them out to BluSmart leading to cash infusion. The valuations of the EV sale deal itself sounded fishy to me.
As already pointed out lots of grey areas of how promoters stake in BluSmart could have led to significant conflict of interest/related party transactions.
@Swaroop_NS regarding Uber takeover promoter himself had denied the rumours:
What i can understand is company was planning to deploy 300 EV’s as an “expirement” with Uber.
What is also interesting is that Refex also has an agreement with Uber:
Maybe they were acquiring these EV’s to service this arrangement?
All in all, the company is in big trouble with lots of senior level exits and liquidity squeeze.
Personally, i still feel lots of skeletons in the cupboard
Just putting some random thoughts mainly on blusmart.
Blusmart’s services are good and appreciated by many in x etc. This proves that product/services loved by customer is not always great for investor and vice-a-versa.
Bad Customer Experiences Can Be Profitable -
Companies that provide poor customer service, such as Bank, telecom or airlines, may still generate high returns for investors. This is because reducing service costs (such as automating customer support or outsourcing) can significantly improve profit margins, even if customers dislike the experience.
This is particularly true for India due to our Hugh population. For large segment like bank etc it’s easy to get new client vs try hard to retain existing client. This is playbook for bank, telcos etc.
@sbkv , It is true promoter denied rumors about Uber. But, on the exact same day, he also refuted rumors of Refex backing out of deal - NSE link below. But, now we know Refex is gone.
Adding 1 and 1 together, my gut feel is both rumors could be true. Refex backing out and Uber stepping in. The situation is quite fluid and changing day to day.
I think this is a case of too little too late by SEBI… after many investors duped.
SEBI could soon launch a probe into alleged improprieties in related-party transactions of Gensol Engineering, among other things, according to people aware of the matter.
“SEBI is concerned about issues of corporate governance, especially the related-party transactions and submission of alleged falsified debt servicing documents to rating agency ICRA,” a person aware of the matter said.
@Hemant_Kumar2 you were right, the house of cards has fallen just as you predicted in your comment a year ago. Unfortunately the number of investors reached to 94k by the time the story unfold. It is strange to see how investors ignore various red flags and fall for all ambitious stories by promoters, news n social media. In fact all those red flags were pointed out by you and other VP members in this thread. Gensol case shows how anchor bias can lead to an overlook on rational thinking.
Interestingly, promoter says he is going ahead with buying preferential basis warrants at a huge premium of 400% (Rs.560) to today stock price of Rs.130. And it is a substantial infusion of 200 crores when the market cap is only 500 crores. Hmm…
Gensol Engineering and promoters barred from accessing capital market, stock split on hold as Sebi orders forensic audit
In a major action against the Gensol Engineering and its promoters, capital market regulator Sebi in an interim order on April 15 has barred promoter brothers Anmol Singh Jaggi and Puneet Singh Jaggi from holding directorship in the company or any key post, as well as restrained them and the company from accessing capital markets.
In the interim order, Sebi’s whole-time member Ashwani Bhatia also directed Gensol Engineering to put its proposed stock split on hold. On Saturday, company had announced stock split in the 1:10 ratio.
Sebi has also proposed to seek a forensic audit of the books of Gensol Engineering and its related parties, with the directive to submit the report within six months of appointment.
SEBI is saying the same thing now. Great insight @jagadees_sharma almost 6 months ago.
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”.
SEBI noted that the promoters were running a listed public company as if it were a propriety firm. GEL’s funds were routed to related parties and used for unconnected expenses as if the company’s funds were promoters’ piggy banks.
