The shares of Small-Cap company, specializing in the design, manufacturing, and development of electric vehicles (EVs), are in focus after Credit rating agency Icra Ltd has downgraded Ola Electric Technologies Ltd, a key subsidiary of listed Ola Electric Mobility Ltd, to BBB- from A3
With a market capitalization of 21,410.17 Crores on Tuesday, the shares of Ola Electric Mobility Limited declined upto 1.7 percent, making a low of Rs. 48.37 compared to its previous closing price of Rs. 49.24. It has declined 70 percent from its all-time high of Rs. 157.53
Ola Electric Mobility Limited, one of the leading electric vehicle (EV) manufacturers in India, is in focus after ICRA, a credit rating agency, has downgraded Ola Electric Technologies Ltd from A3 to a rating of BBB-
ICRA downgraded the credit rating of Ola Cell Technologies (a unit of Ola Electric) due to concerns about its parent company’s financial performance. Ola Electric’s car business is facing tougher competition and taking longer than expected to become profitable, which weakens the overall group’s financial strength.
While Ola Cell started making batteries with a 1.4 GWh capacity in March last year, it faces big challenges like delays, uncertain demand, and the need for high-tech processes and imported materials.
ICRA pointed out some strengths of Ola Cell Technologies, like strong support from its parent company (Ola Electric), being one of the early players in making lithium-ion batteries, having good future demand for electric vehicles, and getting government support through the ACC-PLI scheme, which helps improve project returns.
However, ICRA also noted some challenges: the company has big spending plans ahead, and the project faces risks like delays, uncertain demand, and tough competition. Still, because Ola Electric keeps providing funds periodically, Ola Cell’s liquidity is expected to stay stable for now.
The company’s market share has dropped by almost 69 percent from an all-time high. Despite launching new products and offering discounts, Ola Electric’s sales have continued to fall, and it reported a net loss of Rs. 564 crore in the December 2024 quarter.
Recent problems faced by Ola
In October 2024, the Central Consumer Protection Authority issued a warning after over 10,000 complaints were filed, citing issues like delays, unsatisfactory service, and unprofessional conduct.
In February, the company faced regulatory scrutiny because of a discrepancy between the number of scooters, Ola Electric has reported selling a lot of scooters, but when authorities check the official records, the numbers don’t match. This mismatch in sales and registration data raises concerns and leads to investigations. While Ola Electric claims to have sold 25,000 vehicles in February, only 8,600 vehicles were registered as per Vahan Portal.
Furthermore, Maharashtra RTO authorities inspected Ola showrooms across the state, including Pune, seizing 36 scooters in Mumbai and Pune due to compliance issues, and approximately 75 showrooms were seized. The crackdown has extended to Punjab, where Ola stores have shut down, and Jabalpur, where notices were issued for selling unregistered scooters.
Founder’s New Plan
Bhavish Aggarwal, the founder of Ola, is reorganizing his companies, Ola Electric, Ola Consumer (formerly Ola Cabs), and Krutrim (an AI startup), into a unified conglomerate. This restructuring aims to streamline operations and prepare for an initial public offering (IPO) of Ola Consumer. The leadership and control of these companies will be consolidated under Bhavish Aggarwal’s Family Office, a private investment firm managed by Aggarwal.
Written by Sridhar J
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