SEPC

Why SEPC crashed and became a penny stock 1. The biggest problem: liquidity and debt stress SEPC has historically required very high working capital because it is an EPC business. CRISIL highlighted large working-capital requirements and subdued operating performance as key constraints. In May 2025, CRISIL downgraded SEPC from BBB-/Negative to BB+/Negative, citing lower-than-expected FY25 operating recovery and stretched liquidity. 2. The situation became much more serious in March 2026 This is probably the most important fundamental event behind the sharp collapse. CRISIL downgraded SEPC's bank facilities all the way to CRISIL D/D after the company delayed an approximately ₹6 crore term-loan interest payment due February 28, 2026. CRISIL also reported delays of more than 30 days in clearing letter-of-credit dues and recent overdrawals in cash-credit accounts. A "D" credit rating indicates default/delayed payment and is a major red flag for equity investors. 3. Earlier legal/bank-account problems also damaged confidence In 2023–24, SEPC was involved in legal proceedings concerning Twarit Consultancy Services and other parties. CRISIL noted an interim Madras High Court order that restricted SEPC from withdrawing around ₹33.07 crore from certain bank accounts, contributing to the rating being placed under watch. 4. The company repeatedly needed fresh capital SEPC completed a ₹100 crore rights issue in FY24, while further capital raising was planned. In 2025 it approved another much larger ₹350 crore rights issue, at ₹10 per share, with an entitlement of 11 shares for every 50 held. This helped the balance sheet but also created a dilution/oversupply concern and showed that the company needed external capital to support working capital and debt obligations.