Hold or Sell: Ola Electric Shares Gains 20% on Stock Market Debut – Hit Upper Circuit on First Day of Trading

Hold or Sell Ola Electric Share After Stock Market Debut – Ola Electric Mobility Ltd. made a remarkable entrance into the stock market on Friday, August 9, with its shares hitting the 20% upper circuit limit shortly after listing. This impressive performance came despite initial expectations of a subdued debut, given the current market conditions and the company’s financial standing.

Stock Performance and Listing Details

Ola Electric Share Price NSE- The electric vehicle manufacturer’s shares opened (Ola Electric listing price) at par with its issue price of ₹76 on the National Stock Exchange (NSE) and at ₹75.99 on the Bombay Stock Exchange (BSE). However, the stock quickly gained momentum, reaching the upper circuit of ₹91.2 per share on the NSE by midday, marking a 20% increase from its initial public offering (IPO) price.

IPO Success and Investor Interest

Ola Electric’s ₹6,154 crore IPO, which closed on August 6, garnered significant investor interest, being oversubscribed 4.27 times. The offering comprised a fresh issue of shares worth ₹5,500 crore and an offer-for-sale (OFS) of up to 8.49 crore shares from existing investors.

The Ola Electric IPO saw strong participation across various investor categories. Qualified Institutional Buyers (QIBs) subscribed 5.31 times their allotted portion, while retail investors showed enthusiasm with a 3.92 times subscription. Non-institutional investors, including high net-worth individuals, bid 2.4 times their allocation. Notably, employees demonstrated exceptional interest, subscribing 11.99 times their reserved portion, with a ₹7 per share discount on the final issue price.

Company Profile and Future Plans

Ola Electric positions itself as a pure-play EV company in India, boasting integrated technology and manufacturing capabilities for both electric vehicles and their core components. The company has already delivered seven products and announced four new ones, operating through an extensive network of 870 experience centers and 431 service centers as of March 31, 2024.

The fresh capital raised from the IPO will be strategically utilized for various purposes. ₹1,600 crore is earmarked for research and development, while ₹1,227.64 crore will be invested in expanding the cell manufacturing plant’s capacity from 5 GWh to 6.4 GWh. Additionally, ₹800 crore is allocated for debt repayment, and ₹350 crore for organic growth initiatives.

Financial Performance and Market Outlook

Despite its strong market debut, Ola Electric faces challenges in terms of profitability. The company reported a loss of ₹1,584 crore in the financial year 2024, an increase from the ₹1,472 crore loss in the previous year. This financial performance, coupled with high competition and pricing pressures in the EV sector, presents potential risks for investors.

Hold or Sell: Expert Opinions on Ola Electric’s Stock

Ola Electric Share Hold or Sell – Market analysts have offered varied perspectives on Ola Electric’s stock performance and investment strategy. Prashanth Tapse, Senior VP Research at Mehta Equities, initially anticipated a flat to discounted listing, citing the company’s weak financials and cash flow concerns. However, given the Ola Electric Share’s actual performance, his advice has taken on new relevance.

Tapse recommends that only risk-tolerant investors should consider holding the Ola Electric shares, suggesting a minimum investment horizon of 2-3 years. For those who see the stock dip below its IPO price, he advises a strategy of accumulating shares during such downturns. Tapse maintains that while Ola Electric’s long-term prospects remain promising, investors should brace for potential volatility in the short term.

Offering a more optimistic outlook, Parth Shah of StoxBox advises investors who received share allotments to maintain their positions with a medium to long-term perspective. Shah’s positive stance is rooted in several factors, including the favorable EV market outlook, supportive regulatory environment, substantial fresh capital raised in the IPO, and Ola’s plans for new models and expanded manufacturing capabilities.

These diverse expert opinions highlight the complex nature of Ola Electric’s market position and underscore the importance of individual risk assessment in investment decisions.

Ola Electric’s strong stock market debut, despite initial skepticism, reflects investor confidence in the company’s potential and the broader EV sector in India. However, the company’s path to profitability and its ability to navigate the competitive EV landscape will be crucial factors for its long-term success. As the EV market continues to evolve, Ola Electric’s performance will be closely watched by investors and industry observers alike.