OLA Electric stock rebounds 15% from day’s low amid aggressive store expansion push—details here

Despite starting today’s trading session (December 2) on a weak note, falling 7 per cent, OLA Electric shares staged a strong recovery, erasing early losses to trade at ₹93.70 apiece, up 7 per cent from the previous close of ₹87.41.

The stock hit an intraday low of ₹81.20 before surging 15.40 per cent from that level, driven by an announcement from CEO Bhavish Aggarwal regarding a major store expansion.

In a post on X, Aggarwal outlined an ambitious plan to expand OLA Electric’s retail presence from 800 to 4,000 stores by the end of this month. Highlighting the scale of the initiative, he stated that all the new stores would open simultaneously on December 20 across India, calling it “probably the biggest single-day store opening ever.”

The announcement was well received by the market, fueling optimism around OLA Electric’s growth potential and triggering a surge in the company’s stock price.

The company’s shares have been in the spotlight recently, driven by its entry into the commercial segment with the launch of the ‘Gig’ range of scooters, the introduction of the S1 Z model, and a positive outlook from global brokerage firm Citi.

In November, the company sold only 29,191 units, a 3 per cent year-on-year (YoY) decline compared to 30,073 units sold in the same month last year. On a month-on-month basis, sales dropped 30 per cent from 41,775 units in October. Analysts attribute this decline to rising competition from Bajaj Auto and TVS Motor, which is putting pressure on OLA’s sales.

Despite the drop, OLA Electric retained its leadership position in the electric two-wheeler (E2W) segment, holding a market share of 24.54 per cent at the end of November. This compares to TVS Motor’s 23 per cent and Bajaj Auto’s 22 per cent.

However, Bajaj Auto and TVS Motor have strengthened their market shares over the past year, while OLA’s market share has slipped from 33 per cent in November 2023. Adding to the competitive pressure, Honda recently entered the E2W market with the launch of two electric models last week, signalling that competition in the segment is set to intensify further.

Shares surge 36% in just 7 days

After facing significant selling pressure on Dalal Street between September and October 2024, during which the stock lost 35 per cent of its value, OLA Electric shares regained momentum in November. A strong performance in the last five trading sessions of the month helped the stock close with an 8.07% gain for November.

Over the past seven trading sessions, OLA Electric’s stock has surged 36.30 per cent, driven by multiple positive developments. Among these, global brokerage Citi Research initiated coverage on the stock last week with a ‘buy’ rating and a target price of ₹90 per share.

Interestingly, the stock is currently trading above Citi’s target price. The brokerage expressed confidence in the company’s profitability prospects, citing improvements as capacity utilisation increases. However, the brokerage also flagged service-related issues faced by OLA Electric in recent months, which have weighed on its stock performance.

Citi noted that if the product offering remains attractive, these service challenges will likely ease over the medium term as the company’s back-end supply chain improves.

Furthermore, Citi Research believes that India’s larger electric vehicle (EV) original equipment manufacturers (OEMs) like Ola Electric could dominate the market and remain profitable with an optimal cost structure and industry consolidation.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.