Ola Electric Mobility Ltd. experienced a significant drop in its share price, falling below the ₹100 mark for the first time since its public listing. This decline reflects a broader trend of decreasing investor confidence and challenges in sales performance, which have seen the stock plummet by 37% from its peak of ₹157.4 shortly after its IPO. As the electric vehicle (EV) market evolves, competitors like Bajaj Auto are seizing the opportunity to strengthen their positions.
Main Points
Ola Electric’s shares fell by 4.26% on September 30, reaching a low of ₹97.85 during trading hours. This decline marks a troubling trend, with the stock having been in the red for 12 out of the last 14 sessions. The company’s shares have dropped over 16% in the past month alone, raising concerns among investors about its long-term viability and operational effectiveness.
The recent downturn can be attributed to various factors, including disappointing sales figures and increasing consumer complaints regarding service facilities. In August, Ola Electric reported a staggering 34% decline in sales compared to previous months, selling only 24,615 units in September compared to 27,587 units in August and 41,780 units in July. This decline has led to a drop in market share from 31% in August to approximately 27.4% by the end of September.
Strategic Initiatives Amid Challenges
In response to these challenges, Ola Electric has launched several initiatives aimed at boosting sales and improving market penetration. The company recently introduced its “Network Partner Program,” which aims to expand its presence in tier-2 and tier-3 cities across India. So far, Ola Electric has onboarded 625 partners with plans to increase this number to 1,000 before the festive season. This initiative is crucial as it seeks to tap into previously underserved markets that could provide significant growth opportunities.
Additionally, Ola Electric has achieved certification for its S1 X 2kWh scooter under the Production Linked Incentive (PLI) Scheme. This certification indicates compliance with local manufacturing requirements and could enhance investor sentiment by showcasing Ola’s commitment to domestic production. However, despite these positive developments, the company faces significant hurdles in improving its service capacity and addressing customer complaints.
Bajaj Auto’s Ascendancy
As Ola Electric grapples with these challenges, competitors like Bajaj Auto are capitalizing on its misfortunes. Bajaj has emerged as a formidable player in the electric two-wheeler segment, capturing a growing share of the market as consumer preferences shift towards more reliable options. Reports indicate that Bajaj Auto’s market share has risen significantly, positioning it as a strong contender against Ola Electric.
Bajaj’s strategic focus on enhancing its product offerings and expanding its service network has resonated well with consumers. The company is investing heavily in research and development to innovate within the EV space while also ensuring robust after-sales support—a critical area where Ola Electric has received criticism.
Investor Sentiment and Market Outlook
Investor sentiment surrounding Ola Electric remains cautious as analysts weigh the implications of recent performance metrics. HSBC recently maintained a “buy” recommendation for Ola Electric but noted that improvements are necessary in service capacity before launching new products like motorcycles. The brokerage firm emphasized that while there are opportunities for recovery, they hinge on the effective execution of operational strategies.
Kranthi Bathini from WealthMills Securities advised that long-term investors might consider holding onto their shares but should remain vigilant about market fluctuations and set trailing stop losses for short- to medium-term investments Conversely, some analysts suggest avoiding attempts to capitalize on current low prices until clearer indicators of recovery emerge.
