Ola Electric shares double in just 7 days, valuations now more expensive than Tesla

Ola Electric shares double in just 7 days, valuations now more expensive than Tesla

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On the exchanges on Tuesday, Ola Electric Mobility’s share price continued to rise. In intraday trading today, the share price of the company that makes electric vehicles (EVs) reached a new high of Rs 157.53 on the BSE. In just seven trading days, the share price has more than doubled from its issue price.

The share price of Ola Electric has soared by 107% compared to its initial offering price of Rs 76 per share. On August 9, 2024, the company debuted on the stock market.

Ola Electric’s share price was up 3% at Rs 150.70 on the BSE at 09:28 AM. The BSE Sensex, in contrast, saw a 0.17 per cent increase to 80,560.

One of the top EV producers in India is Ola Electric, which focuses on the vertical integration of manufacturing and technology for EVs and their parts, such as battery cells.

The Red Herring Prospectus (RHP) for Ola Electric states that 82.74% of the outstanding shares are locked in, with the remaining 17.74 per cent of the stock having a free float. Analysts think the stock’s fundamentals are still being evaluated while the company is losing money and has a high value.

“While the long-term potential of Ola Electric might be appealing given the EV market’s favourable outlook, the current valuation appears to be quite speculative. Investors should be cautious, especially given the company’s ongoing losses and the high volatility in its stock price. For new investors, it may be wise to wait for a more stable entry point or consider the stock as a long-term play with a high risk-reward ratio,” said Saji John, senior research analyst, at Geojit Financial Services.

The only carmaker in India to receive PLI schemes for both cell chemistry batteries and cutting-edge automotive technology is Ola Electric. The company is well-positioned to increase profitability over the long run through greater scalability and vertical integration, even in the face of profitability issues and a loss in FY24.

Last week, at their yearly ‘Sankalp’ event, the business unveiled four new motorcycles that fall into different pricing categories.

The company unveiled the future roadmap for the EV and energy verticals as well as new products under the “Roadster” brand. Ola Electric has joined the electric motorbike market with the introduction of “Roadster,” “Roadster X,” and “Roadster Pro.” It has also announced that its cells would be integrated into its cars beginning in Q1FY26.

“While motorcycles dominate the broader two-wheeler market in India, their share in the EV segment is currently just 1 per cent, offering significant growth potential for the company. The launch is expected to positive impact as the company benefits from a first-mover advantage in the electric motorcycle segment and the potential for increased market penetration, Ola is likely to see enhanced revenue visibility over the long term. This strategic move could further strengthen its position in the EV market, contributing to sustained growth in its share price,” Saji John said.

Ola stated in its draft red herring prospectus (DRHP) that it expects e2W penetration to reach 41–56% in FY28, compared to HSBC analysts’ expectations of only 20% by FY28 and 30% by FY30. We believe that range anxiety, the resale value, and the charging infrastructure will continue to be significant barriers to customer acceptance,” the brokerage company stated in its August 15 covering initiation report.

Ola’s chances of gaining market share are slim because the competition is now just as active, and some of them are well-funded. Analysts noted that the competition will only get stronger since Honda has not yet introduced its EVs. They also mentioned that Ola’s plan to manufacture its batteries is a realistic but hazardous one.

“A failure to compete with global players on quality and yield may impact Ola’s competitive positioning and balance sheet strength,” HSBC said. However, the stock has achieved the brokerage firm’s target price of Rs 140 per share.

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