Ola Electric shares continue to plummet, analysts urge caution

Shares of Bhavish Aggarwal-owned Ola Electric saw a further decline on Monday as market analysts warned retail investors to remain cautious due to the stock's speculative valuation amid increasing competition in the electric vehicle (EV) sector.

The company's stock closed at Rs 108.15 per share, a 2.56 per cent drop from its previous session, and has fallen over 31 per cent from its recent all-time high of Rs 157.40.

While the stock market remains optimistic about the growth potential of the EV sector, with Ola leading the two-wheeler segment, its market share has been shrinking due to stiff competition from players like TVS Motor and Bajaj Auto.

Analysts advise caution

Santosh Meena, Head of Research at Swastika Investmart Ltd, said that despite Ola Electric currently being loss-making and trading at high valuations, the market remains hopeful about its future profitability.

"The critical factor will be how quickly Ola can turn profitable in the face of rising competition. While the growth outlook is promising, concerns over valuation and competition mean only aggressive investors should consider staying invested," Meena told IANS.

Analysts have advised caution, particularly due to the company's ongoing losses and the stock's volatility. They noted that the stock appears overvalued and is likely to correct further, suggesting that only investors with a high-risk appetite should consider it at this point.

In August, Ola Electric reported its lowest monthly sales of the year, with a 34 percent sequential drop to 27,506 units. The company’s market share also fell to 31 percent.

Given these factors, analysts recommend that investors wait for a more stable entry point before investing in Ola Electric.

Additionally, the company has faced criticism after a fire incident at an Ola Electric showroom in Karnataka, which triggered a wave of customer complaints on social media regarding product quality and service. Reports indicate that Ola Electric receives about 80,000 complaints per month, with peak days seeing up to 6,000-7,000 complaints, overwhelming its service centers.

IANS