The shares of Small-Cap firm, specializing within the design, manufacturing, and improvement of electrical autos (EVs), are in focus after Credit standing company Icra Ltd has downgraded Ola Electrical Applied sciences Ltd, a key subsidiary of listed Ola Electrical Mobility Ltd, to BBB- from A3
With a market capitalization of 21,410.17 Crores on Tuesday, the shares of Ola Electrical Mobility Restricted declined upto 1.7 p.c, making a low of Rs. 48.37 in comparison with its earlier closing worth of Rs. 49.24. It has declined 70 p.c from its all-time excessive of Rs. 157.53
Ola Electrical Mobility Restricted, one of many main electrical car (EV) producers in India, is in focus after ICRA, a credit standing company, has downgraded Ola Electrical Applied sciences Ltd from A3 to a ranking of BBB-
ICRA downgraded the credit standing of Ola Cell Applied sciences (a unit of Ola Electrical) as a result of considerations about its dad or mum firm’s monetary efficiency. Ola Electrical’s automotive enterprise is dealing with harder competitors and taking longer than anticipated to grow to be worthwhile, which weakens the general group’s monetary energy.
Whereas Ola Cell began making batteries with a 1.4 GWh capability in March final yr, it faces huge challenges like delays, unsure demand, and the necessity for high-tech processes and imported supplies.
ICRA identified some strengths of Ola Cell Applied sciences, like sturdy help from its dad or mum firm (Ola Electrical), being one of many early gamers in making lithium-ion batteries, having good future demand for electrical autos, and getting authorities help by the ACC-PLI scheme, which helps enhance challenge returns.
Nonetheless, ICRA additionally famous some challenges: the corporate has huge spending plans forward, and the challenge faces dangers like delays, unsure demand, and hard competitors. Nonetheless, as a result of Ola Electrical retains offering funds periodically, Ola Cell’s liquidity is predicted to remain secure for now.
The corporate’s market share has dropped by nearly 69 p.c from an all-time excessive. Regardless of launching new merchandise and providing reductions, Ola Electrical’s gross sales have continued to fall, and it reported a web lack of Rs. 564 crore within the December 2024 quarter.
Current issues confronted by Ola
In October 2024, the Central Client Safety Authority issued a warning after over 10,000 complaints have been filed, citing points like delays, unsatisfactory service, and unprofessional conduct.
In February, the corporate confronted regulatory scrutiny due to a discrepancy between the variety of scooters, Ola Electrical has reported promoting a whole lot of scooters, however when authorities verify the official information, the numbers don’t match. This mismatch in gross sales and registration knowledge raises considerations and results in investigations. Whereas Ola Electrical claims to have offered 25,000 autos in February, solely 8,600 autos have been registered as per Vahan Portal.
Moreover, Maharashtra RTO authorities inspected Ola showrooms throughout the state, together with Pune, seizing 36 scooters in Mumbai and Pune as a result of compliance points, and roughly 75 showrooms have been seized. The crackdown has prolonged to Punjab, the place Ola shops have shut down, and Jabalpur, the place notices have been issued for promoting unregistered scooters.
Founder’s New Plan
Bhavish Aggarwal, the founding father of Ola, is reorganizing his firms, Ola Electrical, Ola Client (previously Ola Cabs), and Krutrim (an AI startup), right into a unified conglomerate. This restructuring goals to streamline operations and put together for an preliminary public providing (IPO) of Ola Client. The management and management of those firms will probably be consolidated below Bhavish Aggarwal’s Household Workplace, a personal funding agency managed by Aggarwal.
Written by Sridhar J
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