Ola Electric Stock Back In Focus—But Can It Sustain The Rally?

To say that Ola Electric Mobility Ltd. has witnessed a dramatic surge in trading activity over the past three days is an understatement. The company’s stock price has swung wildly and volumes have topped the charts in these trading sessions.

Understanding the Volatility

The stock jumped 18.7% on Wednesday, only to contract 8.3% and 3.3% over the next two sessions. Despite the volatility, the average delivery percentage of the stock has gradually increased from 18.25% to 25.45% suggesting a slow but likely return of investor interest.

But still, it is possible that intraday trading is dominating the movement as delivery volumes are still below 30% and the delivery turnover has declined from Rs 1,158.6 crore on Wednesday to Rs 354.5 crore on Friday, moreover average delivery volume now stands at 1.43 crore shares—well above the 30-day average. This indicates that while many are still trading short-term, fresh buyers are beginning to take positions, possibly betting on a turnaround.

Driving Factors Behind the Buzz

In terms of what might be driving this buzz, Rajesh Palviya of Axis Securities says that this movement comes on the heels of a mix of positive developments and strategic shifts. “The company’s launch of its new bike and its transition to Ebitda positive territory has likely sparked some optimism among investors,” he said.

Ola’s in-house battery manufacturing plans, which reduce reliance on rare earth metals and introduction of faster charging, has also positioned it favorably in a competitive EV landscape. “These factors, combined with a significant correction in the stock over time, have made it available at attractive valuations,” Palviya added.

Technological Leaps and Investor Confidence

Saji John, Senior Research Analyst, echoed this sentiment, noting that Ola’s early pricing advantage faded as traditional automakers entered the EV space. However, he pointed to the company’s new battery system—boasting a 15-year life and 80% charge in 15 minutes—as a technological leap that has “sparked renewed market interest.” He added, “Given the fact that they were having their own battery setup, and they were immune to any changes in their metals, there is renewed investor confidence.”

Kranthi Bathini, Equity Strategist at WealthMills Securities, provided historical context, stating that “Post listing of Ola with the initial euphoria and all, the stock got corrected… disappointing quarterly earnings from the past two quarters post listing, the stock was beaten down.” However, he acknowledged that recent earnings have shown “some kind of green shoots… reducing the losses,” which has helped restore some investor confidence.

Technical Analysis and Future Prospects

Coming back to technicals, while the market cap has fluctuated between Rs 20,814 crore to Rs 23,470 crore, analysts remain cautious. Palviya warns that long-term technical indicators are still weak, and many investors may be holding only to average out their positions. “More meaningful delivery and investor conviction may emerge only if the stock crosses its 52-week high,” he said.

Still, the volume action depicts heightened interest, and the gradual rise in delivery percentage suggests that Ola Electric may be turning a corner. Whether this marks the beginning of a sustained recovery or just a speculative rally remains to be seen.

For Indian investors looking to capitalize on the potential upside of Ola Electric, it’s crucial to keep a close eye on the company’s future developments, including its expansion plans, technological advancements, and financial performance. Staying informed about the EV industry trends and the competitive landscape will also be essential in making informed investment decisions.