DebtRidden Stocks: Companies That Have Defaulted in the Last Six Months & Their Financial Struggles
DebtRidden Stocks : Over the past six months, several publicly listed companies in India have grappled with escalating debt burdens, leading to defaults that have unsettled investors and stakeholders alike. Notably, Gensol Engineering Limited, AGS Transact Technologies Limited, and Mahanagar Telephone Nigam Limited (MTNL) have faced significant financial challenges, prompting credit rating downgrades and operational disruptions.
Gensol Engineering Limited: Navigating Financial Turbulence
In early March 2025, Gensol Engineering Limited, a prominent player in solar consulting, engineering, procurement, and construction (EPC), as well as electric vehicle (EV) leasing, encountered severe financial distress. CARE Ratings downgraded the company’s long-term and short-term bank facilities to ‘CARE D’, a rating indicative of default or expected default status. This downgrade was attributed to ongoing delays in servicing term loan obligations, reflecting a strained liquidity position.
The company’s financial health had been under scrutiny due to delays in debt servicing, with lenders reporting pending overdues and Special Mention Account (SMA) classifications. Despite previous assurances of sufficient cash reserves, Gensol’s liquidity issues became apparent, leading to a significant drop in its share price. The stock plummeted 20% to hit the lower circuit, settling at ₹413.95 on the BSE following the downgrade announcement.
In response to the crisis, Gensol unveiled a debt reduction strategy aimed at stabilizing its financial standing. The plan involves asset divestments, including the sale of 2,997 EVs valued at ₹315 crore and a wholly-owned subsidiary for ₹350 crore, aiming to reduce debt by ₹665 crore and achieve a debt-equity ratio of 0.8. The company expressed confidence in navigating this turbulent period and emerging stronger.
AGS Transact Technologies Limited: A Cash Management Giant in Crisis
AGS Transact Technologies Limited, an integrated omni-channel payment solutions provider, has been at the forefront of India’s cash management industry. However, in early 2025, the company faced a severe financial crisis marked by defaults and operational challenges.
The company’s auditors issued an adverse report after the Q3 FY25 results, raising concerns over its ability to continue operations. The report highlighted defaults and delays in loan repayments, suspension or cancellation of GST registrations in certain states, and delays in payments of statutory dues, employee salaries, and vendor payments. Credit rating agencies India Ratings and CRISIL downgraded AGS Transact’s term loans and bank loan facilities, respectively, to default status.
Operational disruptions became evident as employees, protesting against non-payment of salaries, refused to replenish ATMs, leading to empty machines and customer dissatisfaction. Banks serviced by AGS Transact reported these issues to the Reserve Bank of India (RBI), further exacerbating the company’s challenges. As of March 4, 2025, the outstanding principal default amount stood at ₹15.3 crore, with an additional interest overdue of ₹1.74 crore.
Mahanagar Telephone Nigam Limited (MTNL): A State-Owned Enterprise Under Duress
Mahanagar Telephone Nigam Limited (MTNL), the state-owned telecommunications company serving Mumbai and Delhi, has been grappling with financial difficulties over the past year, leading to multiple debt defaults.
In November 2024, MTNL defaulted on a ₹1,000 crore loan from Bank of India, compelling the lender to make a ₹200 crore provision in its financials for Q2 FY25. The company’s total financial debt stood at ₹31,944.5 crore as of August 2024, with defaults totaling ₹5,726.3 crore, comprising a principal amount of ₹5,492 crore and interest of ₹234.2 crore. Major lenders affected include Union Bank of India (₹3,480.8 crore), Bank of India (₹1,039.7 crore), and Punjab National Bank (₹447.6 crore).
In early February 2025, the Indian government approved a plan to raise approximately ₹16,000 crore through the sale of assets owned by MTNL and Bharat Sanchar Nigam Limited (BSNL). This strategic move aims to address the mounting debt burdens of these state-run telecom companies.
Financial Overview and Stock Performance
The financial performance and key ratios of these companies over the past year are summarized below:
| Company | Revenue Growth | Net Profit/Loss | Debt-to-Equity Ratio | Stock Performance (YTD) | Stock Performance (Last 6 Months) |
|---|---|---|---|---|---|
| Gensol Engineering Limited | +57% | +50% | 2.33 | -64% | -70% |
| AGS Transact Technologies Ltd. | N/A | -₹194.3 crore | N/A | -80% | -87% |
| MTNL | -11.5% | -₹836 crore | N/A | -21% | -28% |
Note: N/A indicates data not available or not disclosed.
Q&A: Understanding the Debt Defaults
Q: What led to Gensol Engineering’s debt default?
A: Gensol Engineering faced delays in servicing its term loan obligations, leading to a downgrade to ‘CARE D’ by CARE Ratings. The company’s liquidity issues were exacerbated by pending overdues and SMA classifications reported by lenders.
Q: How did AGS Transact Technologies’ financial crisis unfold?
A: AGS Transact Technologies experienced defaults and delays in loan repayments, suspension or cancellation of GST registrations in certain states, and delays in payments of statutory dues, employee salaries, and vendor payments. These issues led to operational disruptions, including empty ATMs, and resulted in credit rating downgrades to default status by India Ratings and CRISIL.
Q: What measures are being taken to address MTNL’s debt crisis?
A: The Indian
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.