Ola Electric stock slips 14% from record high; should you book profit?

Since its listing on August 9, Ola Electric stock has surged 107 percent over its issue price of Rs 76, more than doubling investors' capital.

Shares of Ola Electric Mobility slipped 8 percent to trade over 14 percent lower from the record high of Rs 157.4, hit early in the day on the National Stock Exchange (NSE). Since its listing earlier this month, the stock has surged 107 percent over its issue price of Rs 76, more than doubling investors' capital.

A large trade of 2.3 crore shares, amounting to 0.5 percent equity in Ola Electric and valued at Rs 352.9 crore, took place today at an average price of Rs 151 per share.

While the long-term potential of Ola Electric, especially given the EV market's favourable outlook, might be appealing, the current valuation appears to be quite speculative, according to Saji John, Senior Research analyst, Geojit Financial Services.

"Investors should be cautious, especially given the company's ongoing losses and the high volatility in its stock price. For new investors, it may be wise to wait for a more stable entry point or consider the stock as a long-term play with a high risk-reward ratio," he said.

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Meanwhile, at their annual 'Sankalp' event recently, Ola Electric introduced four new motorcycles across various price ranges. While motorcycles dominate the broader two-wheeler market in India, their share in the EV segment is currently just 1 percent, offering significant growth potential for the company, noted John.

The launch is expected to have a positive impact as the company benefits from a first-mover advantage in the electric motorcycle segment and the potential for increased market penetration.

"Ola is likely to see enhanced revenue visibility over the long term. This strategic move could further strengthen its position in the EV market, contributing to sustained growth in its share price, he added.

At 2:48 pm Ola Electric shares were trading nearly 8 percent lower at Rs 135.35 on NSE. So far this month, the stock has surged around 48 percent. In comparison, benchmark Nifty's rose half a percent during this period.

Earlier, HSBC initiated coverage on Ola Electric with a "Buy" rating and a target price of Rs 140, while noting potential downside risks such as slower penetration of electric two-wheelers (e2Ws) and challenges in its battery plant operations.

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Despite a conservative outlook on EV penetration in India and other uncertainties, HSBC believes Ola Electric is a worthwhile investment.

This confidence is driven by sustained regulatory support, Ola's capability to reduce costs, and a favorable risk-reward profile in its battery venture. Ola Electric's share price has already surpassed HSBC's target price.

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