Ola Electric's 78% stock plunge wipes out ₹8,000cr for SoftBank
What's the story
Ola Electric's shares have witnessed a steep decline of around 78% from their peak, leading to huge notional losses for global investors such as SoftBank and Temasek. At its all-time high of ₹157.4, SoftBank's 14.7% stake in Ola Electric was worth over ₹10,203 crore. Now trading at approximately ₹34.67 per share, the stake is valued at some ₹2,247 crore—an erosion of nearly ₹7,956 crore.
Investor impact
Temasek-backed fund also suffers losses
Temasek Holdings-backed MacRitchie Investments has also been hit by the fall in Ola Electric's share price. The value of its current holding of 4.47 crore shares was around ₹703 crore at the stock's peak, but is now just worth about ₹155 crore. This translates into a notional loss of nearly ₹548 crore or 78% from the top, and a steeper 54% erosion compared with its acquisition cost of ₹75.11 per share.
Company challenges
Ola Electric's market position and financial performance
Ola Electric has been facing a steady loss of market share and poor financial performance. The company slipped to the fifth position in October, behind Bajaj, TVS, Hero, and Ather. The pressure mounted in November when its monthly sales fell below 10,000 units to around 8,400 units. Despite a narrower consolidated net loss of ₹418 crore in the September quarter compared to last year (₹495 crore), revenue plummeted by 43% year-on-year to ₹756 crore.
Investment advice
Retail investors advised to adopt 'wait and watch' strategy
Given the current situation, Kranthi Bathini of WealthMills Securities suggests a 'wait and watch' approach for retail investors. He believes Ola Electric has the potential to surprise markets with announcements in the future. Bathini also recommends a contra bet for high-risk appetite investors as there is a lot of pessimism around the stock which could present an opportunity for big gains over current lows.