Ola Electric shares fall below the issue price, down 52% from their peak.
On Tuesday, the share price of Ola Electric Mobility fell 3% to a record low of Rs 75.20 on the BSE. In today’s intraday trading, the price of Ola Electric’s shares dropped below their issue price of Rs 76 on the market due to high volume.
The electric vehicle (EV) manufacturer’s share price hit its lowest point since August 9, 2024, when it first went on sale. Its peak high of Rs 157.53, reached on August 20, 2024, has more than halved, plunging 52%.
Analysts claim that the company’s brand image has suffered due to a recent spike in complaints regarding its goods and after-sales support, which may have an effect on the company’s volume growth.
They stated that Ola Electric’s market share will be impacted by the growing level of competition in the EV two-wheeler (2W0) industry.
In comparison to the BSE Sensex’s 0.6% fall, Ola Electric was down 2.8% at Rs 75.50 at 10:55 AM. On the NSE and BSE, 17.3 million equity shares have exchanged hands thus far.
As the market leader in the still-developing e-2-wheeler (e2W) sector, Ola Electric is a pure e-2-wheeler (e2W) OEM. It has the best incentives, a tech-focused integrated business strategy, and an innovative product portfolio expansion.
According to domestic sales volume, India is the world’s second-largest 2W market. In fiscal 2023, the Indian 2W market accounted for 15–25% of the world’s 2W output. India’s e2W penetration is lower than that of Germany, China, France, Spain, and Italy, even though the country has the second-largest domestic 2W sales volume. However, it is anticipated that by fiscal 2028, this would increase from around 5.40 percent of domestic 2W registrations recorded on the VAHAN portal in Fiscal 2024 to 41–56 percent of domestic 2W sales volume.
With EV adoption tailwinds, aggressive model introductions at different price points, and an emphasis on R&D and vertical integration, analysts are still upbeat about the company’s future prospects, which could boost profitability in the medium run.
Kotak Institutional Equities analysts think the company is well-positioned to take advantage of the EV opportunity because of the following factors: end-to-end vertical integration (which will help with margin expansion), pure play EV OEM with aggressive model launches and no risk of cannibalizing ICE sales, sectoral tailwinds with growing EV penetration in two-wheelers, and the most incentivized player that will help the company be aggressive in pricing to scale up operations.
Despite promising growth prospects, the brokerage thinks Ola Electric’s stock is properly valued given the dangers of losing market share as a result of increased competition, as well as the persistence of problems with product quality and after-sales support.
In their coverage initiation report, analysts at the brokerage stated, “Although we acknowledge all positives are adequately priced in, there remains a risk associated with market share loss, led by growing competitive intensity and execution (spike in complaints about products and after-sales service) and its subsequent impact on brand.”
A ‘Reduce’ rating was given by the firm, with a target price of Rs 80 per share. Interestingly, this fair value exceeds the current market price of the stock.
Ambit Capital analysts also predict that Ola Electric’s market share will drop to 25% by FY31E (from 42.4% in FY25YTD) as new competitors (Honda and Suzuki in Q4 FY25) join the market, other e-2W OEMs broaden their product offerings, and Ola Electric’s incentives are completely used. According to the brokerage firm’s September month report, Ola Electric faces risks from this as well as the possibility of changes in government regulations, increased competition, and low profitability in a capital expenditure-intensive business model.
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