Ola Electric Plunges Over 7% to 52-Week Low After Insolvency Petition Disclosure

Ola Electric shares fell over 7% on Monday, marking a new 52-week low and dropping below ₹50 for the first time.

The stock hit a record low of ₹46.40 on the Bombay Stock Exchange (BSE) during early trade. By 3:00 pm, it was trading at ₹46.95, down 7.10%.

The decline followed the company’s announcement that an insolvency petition had been filed against its subsidiary, Ola Electric Technologies.

The National Company Law Tribunal (NCLT) in Bengaluru received a petition from Rosmerta Digital Services, an operational creditor, alleging that Ola Electric Technologies defaulted on payments for services rendered.

The creditor has requested the tribunal to initiate a Corporate Insolvency Resolution Process (CIRP) against the subsidiary.

Company’s Response to the Petition

Ola Electric acknowledged the petition in a statement to stock exchanges:

“We wish to inform you that a petition has been filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) by M/s Rosmerta Digital Services Limited, an Operational Creditor of Ola Electric Technologies Private Limited, a wholly owned subsidiary of Ola Electric Mobility Limited.”

The company added:
“The petition has been submitted before the National Company Law Tribunal Bengaluru Bench (NCLT, Bengaluru), alleging default in payment towards the services rendered by the Operational Creditor and seeking initiation of the Corporate Insolvency Resolution Process (CIRP) against Ola Electric Technologies Private Limited.”

Market Experts’ Mixed Opinions

Market analysts have differing views on Ola Electric’s stock performance. The company’s shares have been declining since their listing, and the insolvency petition has added to investor anxiety.

Kranthi Bathini, director of equity strategy at WealthMills Securities, commented:
“Ola Electric has been in a downtrend post listing. Recently, the stock went up to ₹100 levels. The stock is in a downtrend because of negative reasons. And also, the recent insolvency petition is creating some negative impact on this stock. By and large, the stock is in a negative trend right now.”

Bathini noted that Ola Electric’s plan to launch its own lithium-ion batteries from April 1 could provide a boost. However, in the short to medium term, the stock may continue to face pressure.

“The stock is facing challenges in the medium to short term. These stocks are suitable for high-risk capital investors only. One can hold on to the stock due to the outlook for the EV space. The launch of lithium-ion batteries from April could be a big game changer for the company,” he added.

Petition Details and Legal Stand

Rosmerta Digital Services Ltd, Ola Electric Technologies’ vehicle registration service provider, announced on Saturday that it had filed an insolvency petition. In a regulatory submission, Ola Electric stated:

“A petition has been filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) by M/s. Rosmerta Digital Services Ltd, an operational creditor of Ola Electric Technologies Pvt Ltd.”

The petition was submitted to the NCLT Bengaluru Bench, alleging payment defaults for services rendered and requesting the initiation of the CIRP against Ola Electric Technologies Pvt Ltd.

Ola Electric Mobility asserted that it has obtained legal advice and strongly disputes the claims.

The company stated that it would “take all necessary and appropriate measures to safeguard its interests and challenge the claims in the aforementioned case.”

Efforts to Resolve Payment Issues

Last month, Ola Electric disclosed that it was renegotiating its agreements with Rosmerta Digital Services Pvt Ltd and Shimnit India Pvt Ltd.

The objective was to reduce costs and improve the efficiency of the registration process.

Stock Performance Overview

On Monday, Ola Electric’s stock opened at ₹50 on the BSE, reaching an intraday high of ₹50.16 and a low of ₹48.61. The stock slumped 7.12% to ₹46.94 on the BSE and 7.04% to ₹46.95 on the NSE, both marking a 52-week low.

Anshul Jain, Head of Research at Lakshmishree Investment and Securities, noted that Ola Electric’s share price had broken below its IPO base low of ₹76, confirming a bearish pattern.

“After a post-IPO climax at ₹157, the stock has been in a firm downtrend. With the break below ₹76, the next key extension target stands at ₹34, expected in the coming weeks. Unless a strong reversal emerges, selling pressure could intensify. Traders should remain cautious as the downtrend remains firmly in control,” Jain said.

Financial Performance and Challenges

Ola Electric Mobility reported a widening consolidated net loss of ₹564 crore for the third quarter ending December 31, 2024.

This was attributed to reduced revenue caused by increased competition and one-time expenses to address service issues. In the same quarter last year, the company recorded a net loss of ₹376 crore.

Revenue from operations for the third quarter stood at ₹1,045 crore, down from ₹1,296 crore in the prior-year quarter.

However, the company reported its highest-ever e2W (electric two-wheeler) registrations at 3.33 lakh units, reflecting a 37.5% increase compared to the same period last year.

Outlook and Future Prospects

Despite recent challenges, Ola Electric is preparing to launch its own lithium-ion batteries from April, which could positively impact the stock.

However, experts caution that the short to medium-term outlook remains uncertain due to ongoing financial and legal pressures.

The insolvency petition adds another layer of complexity to Ola Electric’s existing financial struggles.

The company is also undergoing a restructuring exercise aimed at reducing losses, which includes cutting around 1,000 jobs across different departments.