With a market capitalization of ₹ 5,339 crores, Olectra Greentech is a small-cap company That manufactures composite polymer insulators and electrical buses. It recently entered into a technical partnership with Reliance Industries and developed a hydrogen bus. Moreover, the company’s e-tipper received India’s first homologation certificate from automobile regulatory agencies making it roadworthy.
When investors are deciding whether to invest in a company or not, one of the most important factors that they consider is its future prospects. Olectra Greentech is one such company that has a futuristic business and it created wealth for its long-term investors.
Olectra Greentech’s share price increased from ₹ 18.00 seven years ago to ₹ 661.00 apiece, thereby giving multibagger returns of 3572 percent in seven years. Thus, if an investor had invested ₹ 10,000 in the company’s shares seven years ago, the value of their holdings would have been ₹ 3,67,222 today!
As far as e-buses are concerned, the company has consistently been one of the top three players in the market in terms of market share (28 percent), followed by Switch Mobility (16 percent), JBM Auto (15 percent), PMI Electro Mobility (28 percent), Tata Motors (11 percent), and others (1 percent) as per data for the first half of FY23.
The Hyderabad-based company recently acquired a 26 percent stake in Evey Trans (Tel) Private Limited which will act as a special-purpose vehicle for executing a contract to manufacture 550 electric buses for Telangana State Road Transport Corporation (TSRTC).
Moreover, it has acquired 150 acres of land in Hyderabad for setting up a new greenfield plant with a capacity of 5,000 units per year and scalable up to 10,000 units per year. It plans to enter into staff transport and is already working on strengthening the inter-city/ inter-state private transport segment. In addition, it plans to establish TARMAC buses in airports.
Olectra Greentech has a low return on equity of 4.66 percent and an ideal debt-to-equity ratio of 0.10. Its shares were trading at a price-to-earnings ratio (P/E) of 94.77, which is significantly higher than the industry P/E of 31.37, therefore the stock might be overvalued. This could also indicate that investors are willing to pay a higher price for the company’s future earnings.
The company has promoter holdings of 50.02 per cent. Retail investors hold a 40.85 percent stake in the company, followed by foreign institutions with 9.03 percent, mutual funds with 0.06 percent and other domestic institutions with 0.04 percent.
Written by Simran Bafna
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