Ola Electric shares rebound after $5B slump
What's the story
Ola Electric Mobility Ltd.'s shares are on the mend after a $5 billion slump, with investors betting that the Indian electric two-wheeler manufacturer is turning a corner. The stock hit a record low in July but rebounded 31% in August, marking its biggest monthly rally since last year's much-anticipated listing. The recovery is driven by Ola's launch of an indigenously developed lithium-ion cell battery and government incentives for newly-launched scooters.
Market performance
Stock still down by over 60% from post-IPO peak
Despite August's surge, Ola Electric's stock is still down by over 60% from its post-IPO peak. The company's market share has been affected by a series of issues, including cases of its scooters catching fire. However, analysts at Arihant Capital Markets Ltd. believe that Ola will maintain its market share as electric scooters gain popularity, and the upcoming festive season could boost sales.
Future prospects
Investment managers show increasing interest in Ola Electric
Ola Electric's plans to expand its gigafactory and develop in-house cell technology could make it a "credible global alternative to Chinese manufacturers that dominate the supply chain," according to Arihant Capital Markets Ltd. Investment managers such as Mirae Asset Financial Group and Helios Capital Asset Management have also increased their stakes in recent months, indicating optimism for the stock.
Analyst outlook
Sell-side analysts cautious about company's future performance
Despite the optimism from investment managers, sell-side analysts remain cautious about Ola Electric's future performance. Of the seven brokers tracking the company, three have sell calls while two recommend holding onto the stock. Their average target price also indicates a 14% decline over the next 12 months. Independent analyst Avinash Gorakshakar told Bloomberg that investors will be closely watching Ola's performance in the coming quarters, especially its ability to generate positive cash flow.