Ola Electric’s Volatile Recovery Amid Operational and Industry
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Ola Electric Mobility Ltd. experienced a dramatic turnaround in its stock performance, rising over 16% after hitting a record intraday low. This sharp rebound surprised many investors and suggested underlying market confidence despite several ongoing issues. These include legal disputes, financial share and profitability, slower market growth, and internal operational setbacks. The electric two-wheeler (e-2W) industry itself is evolving rapidly, adding more complexity to the company’s journey. Ola’s response to these challenges and its strategy to bounce back are under close scrutiny by investors and analysts
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1. Legal and Financial Hurdles Impact Market Sentiment
Ola Electric is currently under pressure due to a legal dispute with Rosmerta Digital Services, which has filed a petition with the National Company Law Tribunal (NCLT) over alleged non-payment. Ola strongly denies the claim and plans to contest it legally. Simultaneously, Kotak Institutional Equities downgraded the company’s fair value estimate from ₹65 to ₹50, reflecting a 23% drop. This downgrade is driven by concerns about Ola’s profitability, increasing warranty costs, and delays in product launches—especially the much-anticipated motorcycle. These factors have eroded investor confidence and affected the company’s market valuation.
2. Financial Share and Profitability
Despite these setbacks, Ola Electric is actively implementing measures to stabilize and grow. The company has introduced significant price cuts—up to ₹26,750—on its popular scooters like the S1 Air and S1 X+ to stimulate demand and increase its share in the competitive e-2W market. Ola also announced it has reduced monthly operating costs by ₹90 crore through streamlining service operations, optimizing workforce, and revamping its network. The company targets EBITDA breakeven by the June quarter. These strategic efforts are aimed at improving financial health, sustaining market relevance, and preparing for the critical motorcycle launch that analysts say is vital for brand equity.
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