Olectra Greentech stock zooms 7% on reports of being lowest bidder for 327 electric buses

Shares of Olectra Greentech, an electric bus manufacturer, rose nearly 7% in intraday trade on Tuesday, October 8, to ₹1663.45 apiece, breaking a three-day losing streak. This sharp reversal in shares came after the company emerged as the lowest bidder for a contract to supply 327 electric buses to the Himachal Road Transport Corporation (HRTC), ANI reported. 

In an effort to boost green mobility in Himachal Pradesh, HRTC had issued a bid for 327 electric buses (297 of 9 meters and 30 of 12 meters) for outright purchase. After the tendering process and technical evaluation, Olectra and Switch Mobility met the qualifications, with Olectra offering the lowest bid. HRTC is now expected to finalise the order soon, according to the report.

Meanwhile, the stock exchange, BSE has sought clarification from the company over the report.

As state governments increasingly adopt green vehicles for public transportation, Olectra Greentech has been actively participating in bidding processes initiated by various state transport undertakings (STUs).

As of March 31, 2024, Olectra’s order book for electric buses stood at 10,969 units, with more tenders anticipated to boost this number. According to the company’s FY24 annual report, approximately 1,695 of Olectra’s e-buses were in operation on Indian roads by the end of the fiscal year, collectively covering over 10 million kilometers each month.

The Union Cabinet in September approved the “PM-eBus Sewa-Payment Security Mechanism (PSM) scheme.” The scheme, with a total outlay of ₹3,435.33 crore, is aimed at supporting the procurement and operation of electric buses (e-buses) by Public Transport Authorities (PTAs).

Under the scheme, more than 38,000 electric buses are expected to be deployed from FY 2024-25 to FY 2028-29, with support provided for up to 12 years from the date of deployment. Currently, the majority of buses operated by PTAs run on diesel or CNG, and electric buses account for less than 10% of the total bus fleet on Indian roads.

Well-Positioned

In FY24, the Indian electric bus market saw impressive growth of 75%, with 3,516 units sold compared to 2,006 units in FY23. Leading the e-bus delivery, the company has emerged as a significant contributor, according to data from the Vahan Portal.

The market for electric buses in India generated USD 282.7 million in revenue in 2023 and is forecasted to grow at a strong CAGR of 18.2% from 2024 to 2030, potentially reaching USD 905.4 million by the end of the decade, as estimated by P&S Market Research.

State Transport Undertakings (STUs) are expected to require about 370,000 buses by 2030, which calls for significant upgrades in infrastructure. Part of this transformation will involve replacing approximately 35,000 outdated diesel buses with cleaner options.

As e-bus production and deployment within fleets continue to surge, Olectra is well-positioned to benefit from this growth trajectory.

The company saw its consolidated revenue from operations grow by 45.37% year-on-year (YoY) to ₹314 crore in Q1 FY25. Net profit after tax rose to ₹24 crore, marking a 33% increase from ₹18 crore in the same quarter last year.

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