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After plumbing lows, Ola gets a full charge on D-Street; stock jumps 31% in August



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Ola Electric Mobility shares posted their biggest monthly gains since listing in August last year, driven by expectations of securing the government’s production-linked incentives and fresh institutional investor interest.

The stock jumped nearly 31% in August-when the market sentiment has been wobbly-rebounding from its all-time lows last month, boosted by the 14.5% gains this week and 14.2% upmove in the previous week.

“The rally in Ola Electric shares has been driven by rising institutional interest, with nearly 10 bulk deals recorded last week,” said Sagar Shetty, research analyst at BP Equities. “Optimism is also being supported by the PLI scheme for its Gen-3 scooters and the planned start of battery manufacturing in late October.”

ola chartETMarkets.com

The company said on Thursday it secured a production linked incentive (PLI) certification for its Generation 3 scooters portfolio, which covers all seven models in the portfolio. This accounts for “the majority of the company’s current sales”.

The PLI certification makes Ola Electric eligible for incentives ranging from 13% to 18% of the determined sales value until 2028, said the company in an exchange filing.
“The approval is being seen as a boost to profitability and margin expansion, which has revived investor confidence in the stock,” said Jahol Prajapati, research analyst at Samco Securities.
Ola shares have struggled since their stock market debut in August 2024, when they listed at ₹76, on par with the IPO price. After hitting an all-time high of ₹126.96 later that month, the stock slid nearly 69% to ₹39.58 in July amid uncertainty over the company losing market share, scrutiny of sales data discrepancies, concerns over the quality of products, and missing trade certificates at several of its retail outlets.
The stock’s valuations had turned cheap after the battering since listing, said analysts.

“Despite the challenges, Ola Electric was trading at very cheap levels of around ₹45 – about 40% lower than its IPO price of ₹76,” said Dharmesh Kant, head of research, Cholamandalam Securities. “The company also made an operating profit in the month of June as per management commentary.”

Kant is, however, unwilling to bet on the stock for a longer trajectory.

“The recent gains could be short-lived due to a lack of conviction on delivering sales volume growth, ” said Kant. “At ₹40-50, investors are willing to take a bet on Ola Electric, and it can move around 10% higher, but the stock is expected to remain volatile till the numbers indicate a stable trajectory in sales.”

BP’s Shetty is more optimistic about its prospects.

“Unlike in earlier periods when performance lacked strong backing, the company’s Q1 results now point to a more promising outlook, setting the stage for further gains,” he said. “The key concern has been weak retail confidence in Ola, but that seems to be easing as nearly 90% of vehicles have reported no complaints.”

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