Ola Electric is currently facing significant challenges as its share price plummeted nearly 6% during trading on Monday. This decline follows the announcement from Rosmerta Digital Services Ltd, a key vehicle registration service provider, revealing plans to initiate insolvency proceedings against Ola’s subsidiary, Ola Electric Technologies Pvt Ltd. The situation has sparked concerns among investors, leading to increased scrutiny of the company’s financial stability.

Insolvency Proceedings Initiated

Rosmerta Digital Services Ltd, acting as an operational creditor, has filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) with the Bengaluru Bench of the National Company Law Tribunal. The petition alleges that Ola Electric Technologies has defaulted on payments for services rendered, prompting the request for the commencement of the Corporate Insolvency Resolution Process (CIRP) against the company.

• Key Details:
  • Rosmerta Digital Services is an operational creditor.
  • The petition claims a default on payments.
  • Proceedings initiated in Bengaluru.

In response, Ola Electric Mobility has stated that it is actively engaging legal counsel to contest these allegations and plans to take all necessary steps to protect its interests. The company emphasized its commitment to challenging these claims vigorously.

Efforts to Renegotiate Agreements

In an effort to mitigate its financial obligations, Ola Electric has previously indicated that it is in discussions to renegotiate contracts with both Rosmerta Digital Services Pvt Ltd and Shimnit India Pvt Ltd. The goal is to lower costs and enhance the efficiency of the vehicle registration process.

Current Share Price and Market Analysis

As of today, Ola Electric’s share price opened at ₹50 on the Bombay Stock Exchange (BSE). Throughout the day, the stock reached a high of ₹50.16 but also dipped to a low of ₹48.61. Anshul Jain, Head of Research at Lakshmishree Investment and Securities, noted that the stock has fallen below its initial public offering (IPO) base of ₹76, indicating a bearish trend with lower highs and lows. Jain warned that unless a strong reversal occurs, further selling pressure could be anticipated, with a potential target of ₹34 in the upcoming weeks.

Financial Performance Overview

Ola Electric’s financial results for the third quarter ending December 31, 2024, reveal a widening consolidated net loss of ₹564 crore, compared to a net loss of ₹376 crore in the same quarter the previous year. This increase in losses is attributed to heightened competition and one-time expenses aimed at resolving service-related issues. Revenue from operations also saw a decline, dropping to ₹1,045 crore from ₹1,296 crore year-over-year. However, the company did report achieving a record 3.33 lakh units in electric two-wheeler registrations, marking a 37.5% increase from the prior year.

• Q3 Highlights:
  • Consolidated net loss: ₹564 crore.
  • Revenue from operations: ₹1,045 crore.
  • Record e2W registrations: 3.33 lakh units.

Investors are advised to monitor Ola Electric’s next moves closely, particularly regarding its legal strategies and ongoing negotiations, as the situation continues to evolve.