Ola Electric share price jumps 9% after addressing sales issues

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Ola Electric share price jumps 9%

Key Takeaways

- Ola Electric stated that its February sales dip resulted from vendor negotiations over vehicle registrations.

- Rosmerta Digital Services has filed an insolvency petition against Ola Electric, alleging non-payment for services.

- Experts suggest investors avoid averaging down their holdings, citing governance, customer dissatisfaction, and financial losses.

Sales Backlog and Regulatory Inquiries

After a one-day halt, Ola Electric's shares jumped 9.46% on Friday, reaching an intraday high of ₹56.55. The surge followed the company’s clarification regarding February’s temporary sales slowdown, which it attributed to ongoing negotiations with vendors handling vehicle registrations, reports Business Today.

Ola Electric Mobility Ltd (OLAE) share price dynamics (Feb 2024 - Mar 2025) Source: TradingView

In response to concerns from the Ministry of Road Transport and Highways (MORTH), the Ministry of Heavy Industries, and four state authorities, Ola Electric assured stakeholders that it is actively addressing inquiries.

According to the company, 40% of the backlog has already been cleared, with daily registrations now surpassing 50% of the three-month average. The remaining backlog is expected to be resolved by the end of March 2025.

Insolvency Petition Filed Against Ola Electric

Despite the stock's rebound, Ola Electric faces financial and legal challenges. Rosmerta Digital Services has filed an insolvency petition against the company, claiming default in payments for services rendered.

The petition, submitted to the National Company Law Tribunal (NCLT) in Bengaluru, seeks the initiation of the Corporate Insolvency Resolution Process (CIRP) against Ola Electric Technologies Pvt Ltd.

Ola Electric has strongly denied the claims, stating that it has sought legal counsel and will take all necessary steps to challenge the petition. The company emphasized its commitment to protecting its business interests.

Market Analysts Warn Against Averaging the Stock

Despite Friday's recovery, market experts remain cautious about Ola Electric’s long-term prospects. Analysts suggest investors should refrain from averaging down their holdings, citing financial instability, governance issues, and customer dissatisfaction.

Sebi-registered analyst Mitesh Panchal advised investors to approach the stock with caution. "Technically, Ola Electric may be a buy at current levels for a short-term bounce with a stop loss at ₹48, but it is unlikely to surpass ₹65-70 in the next three months. Investors holding shares above ₹100 should avoid averaging down and consider partial exits," he said.

Gaurang Shah, Senior VP at Geojit Financial, echoed these concerns, pointing to the company's financial losses exceeding ₹1,500 crore, governance issues, and unresolved customer grievances. He advised investors seeking exposure to the EV sector to consider established players rather than Ola Electric.

While Ola Electric’s stock saw a strong rebound after clarifying its sales backlog, lingering financial and legal uncertainties make it a risky investment. Analysts suggest that traders may find short-term opportunities, but long-term investors should be cautious due to unresolved insolvency claims and broader governance concerns.

Additionally, Tata Motors' stock gained 4% on March 12 after the company’s CFO provided optimistic guidance on Jaguar Land Rover (JLR) and domestic operations.

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