Gensol Engineering: A Little-Tracked Stock That Has Surged 28 Times On EV Pivot
The stock has surged nearly 28 times since December lows.
Till about the end of last year, Gensol Engineering Ltd. was a relatively little-known solar consultant and operator of a fleet of electric cabs. Then, the company kicked off its plan to pivot to a manufacturer of EVs. Soon, investors began piling in.
The stock, which will soon switch from the platform for small businesses to the main board at BSE Ltd., has surged nearly 28 times since December lows as the company expands business to make battery-powered vehicles. It hit the upper circuit at Rs 1,548 apiece on Aug. 24 compared with around Rs 55.70 in December.
The relative strength index of the stock is 87, suggesting it may be overbought. The stock is hardly tracked by analysts.
The company, controlled by Anmol Singh Jaggi and his younger brother Puneet Singh Jaggi, started as a solar plant advisory and engineering and procurement company, and then diversified into electric vehicle leasing. The promoters also founded the Gurugram-based electric car fleet operator BluSmart Mobility in 2019.
On Aug. 17, JPMorgan, citing the company's interaction with analysts, said that Gensol will start manufacturing three-wheeled electric vehicles for personal use and cargo EVs from October. It also plans to manufacture electric four-wheelers from the next fiscal, the research firm said in a report.
The company, speaking to analysts and investors at its Chakan plant earlier this month, said it will manufacture 1,200 vehicles a month starting from October, with deliveries starting from January.
India's electric car market is tiny, about 1% of the total. And demand is largely driven by battery-powered two- and three-wheelers, a category Gensol plans to target initially. The nation's biggest carmakers including Maruti Suzuki India Ltd., Tata Motors Ltd., Mahindra & Mahindra Ltd. and Hyundai Motor India Pvt. have announced investments to develop EVs.
Gensol, too, is betting on growing demand for EVs. It has incorporated a subsidiary Gensol Electric Vehicles Pvt. for acquiring the patents, trademarks, technical and business know-how, according to its filings. In July, it bought a majority stake in a U.S.-based electric vehicle manufacturing startup, Gensol said in a filing, without disclosing the name of the target firm.
In May, Gensol acquired a minority stake in Fair Climate Fund India Pvt., an organisation that maps carbon footprint of business operations, products and services.
The Opportunity
The current EV three-wheeler penetration, excluding electric rickshaw, ranges between 7% to 9% in recent months, JPMorgan said citing data from the government's Vahan portal. The share of passenger electric vehicles is at 1%, with Tata Motors leading with an 87% share, the report said.
New launch momentum in calendar years 2023 through 2025 will drive the next leg higher in the passenger vehicle EV penetration, JPMorgan said.
The EV penetration in three-wheelers, including e-rickshaws, is inching closer to the 60% mark, the report said. Excluding e-rickshaws, the market share for electric three-wheelers is rising steadily and the brokerage expects this to increase further as Bajaj Auto Ltd., the leader in internal-combustion engine segment, and TVS Motor Co. plan to launch electric vehicles.
Gensol's Targets
Gensol reported a revenue of Rs 160 crore in the financial year through March. It targets a top line of Rs 500-600 crore in FY24, and aims to scale that up to more than Rs 2,030 crore in fiscal 2025, according to its exchange filings.
Gensol has more than 700 cars and it expects to lease over 3,000 cars this fiscal.
Gensol's 1.09 crore shares will move from the BSE SME platform to the main board, according to a June filing to the stock exchange.
On Aug.19, it also approved the allotment of up to 13.51 lakh equity shares at Rs 1,036.25 apiece on a preferential basis to the promoter and non-promoter group category.