Ola Electric shares tumbled over 7% on Monday, marking a fresh 52-week low and dipping below Rs 50 for the first time since its market debut. The stock plunged to an intraday low of Rs 46.40 on the Bombay Stock Exchange (BSE) before recovering slightly to trade at Rs 46.95 by 3:00 pm, reflecting a 7.10% decline.
The sharp drop came in the wake of a disclosure about an insolvency petition filed against its subsidiary, Ola Electric Technologies. The National Company Law Tribunal (NCLT) in Bengaluru received a petition from M/s Rosmerta Digital Services, an operational creditor, alleging that Ola Electric defaulted on payments for services rendered. The creditor has requested the tribunal to initiate a Corporate Insolvency Resolution Process (CIRP) against Ola Electric Technologies.
In a regulatory filing, Ola Electric confirmed the development, stating:
"We wish to inform you that a petition has been filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) by M/s Rosmerta Digital Services Limited, an Operational Creditor of Ola Electric Technologies Private Limited, a wholly owned subsidiary of Ola Electric Mobility Limited. The petition has been submitted before the National Company Law Tribunal Bengaluru Bench (NCLT, Bengaluru), alleging default in payment towards the services rendered by the Operational Creditor and seeking initiation of the Corporate Insolvency Resolution Process (CIRP) against Ola Electric Technologies Private Limited."
Market analysts expressed mixed views on the stock’s trajectory. Ola Electric’s shares have been on a consistent decline since its listing, and the insolvency proceedings have further intensified negative sentiment.
Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, commented, "Ola Electric has remained in a downtrend since its listing. The stock briefly touched Rs 100 but failed to sustain that level due to multiple headwinds. The insolvency petition has further weighed on investor confidence, adding to the stock's ongoing bearish sentiment."
Bathini acknowledged that while the company is facing significant challenges in the short term, there are potential growth triggers on the horizon. He pointed to Ola Electric’s plans to launch its own lithium-ion batteries from April 1 as a key turning point that could improve the company’s margins and overall market position.
"The company’s business model is futuristic, and while current challenges dominate the narrative, the electric vehicle (EV) space remains promising. If Ola Electric successfully launches its lithium-ion batteries, it could be a game-changer, enhancing margins, reducing reliance on external suppliers, and potentially driving long-term growth," Bathini explained.
However, he cautioned that the stock remains a high-risk play, particularly in the short to medium term, and advised only investors with a strong risk appetite to hold or consider buying.
Other market experts echoed similar sentiments, suggesting that Ola Electric’s long-term success hinges on its ability to address operational inefficiencies, improve financial stability, and deliver on its battery production promise.
Vivek Ranjan, Senior Market Analyst at Prosperity Wealth Advisors, added, "While the insolvency petition raises red flags, it’s important to note that the parent company, Ola Electric Mobility, is still operational and expanding. The EV industry in India has tremendous potential, and Ola Electric remains a key player despite its current setbacks. Investors with a long-term perspective might view this as an opportunity to enter at a lower price, provided they’re prepared for volatility."
Ola Electric has been a prominent name in India’s EV market, particularly in the electric scooter segment. The company’s flagship S1 scooters gained widespread attention for their design, performance, and competitive pricing. However, production delays, delivery issues, and now legal troubles have overshadowed its initial success.
The company’s ambitious plan to launch a range of electric motorcycles by the end of 2024 and its move to develop indigenous battery technology remain key factors that could define its future trajectory. With rising competition from established automakers and emerging startups, Ola Electric’s ability to innovate, scale production, and restore investor confidence will be crucial.
For now, the stock remains under pressure, and market watchers are closely observing how the company manages this challenging phase — particularly the outcome of the insolvency petition and whether the upcoming battery launch can turn the tide.
