Ola Electric Shares Tank 6% Amid Rising Scrutiny Over Customer Complaints

Ola Group Chief Human Resources Officer Balachandar N Quits

SUMMARY

Shares of Ola Electric closed today’s trading session at INR 90.81, down 5.19% from the previous close

The Centre has asked the Automotive Research Association of India to verify if the EV maker is honouring warranties and maintaining the requisite service centres

Ola Electric has been facing a lot of criticism over complaints by customers about its poor aftersales service

Shares of Ola Electric slumped as much as 5.8% to INR 90.19 during the intraday trading on the BSE on Thursday (October 10) amid increasing government scrutiny of the two-wheeler EV startup over customer complaints.

The stock recovered slightly to end today’s trading session at INR 90.81, down 5.19% from the previous close. As many as 4.9 Cr shares were traded today and the company’s market capitalisation stood at INR 40,054.75 Cr (around $4.7 Bn) at the end of the day.

Earlier, it was reported that the Ministry of Heavy Industries (MHI) has written to the Automotive Research Association of India (ARAI) to verify if the EV maker is honouring warranties and maintaining the requisite service centres.

The Bhavish Aggarwal-led company has been facing a lot of criticism due to rising customer complaints about its aftersales service. On Sunday, Aggarwal was involved in a social media spat with comedian Kunal Kamra. While Kamra flagged customer complaints about the company’s escooters, Aggarwal accused him of taking money to criticise the company.

The company’s shares tanked 9% on October 7. Later, Ola Electric said that the Central Consumer Protection Authority (CCPA) issued a show cause notice to it for alleged violation of consumer rights, misleading advertisement, and unfair trade practices.

Since reaching a post-listing high of INR 157 in August, the company’s shares have tanked almost 42.1%. However, the stock is still trading over 19% higher from its listing price of INR 75.99 on August 9.

Ola Electric is also facing pressure from competitors in terms of sales. Its escooter registrations dropped 11% month-on-month (MoM) to 23,965 units in September, marking its lowest monthly vehicle sales since October last year.

However, brokerages are positive about the stock. Last month, Goldman Sachs initiated coverage on Ola Electric and gave a buy rating, with a price target of INR 160 apiece. BofA Securities also has a buy rating on the stock.

On the financial front, Ola Electric managed to trim its consolidated net loss by 30% to INR 347 Cr in Q1 FY25 from INR 267 Cr in the year-ago period. Operating revenue rose 32% year-on-year to INR 1,644 Cr in the reported quarter.