(Photo : olaelectric.com)

The Indian stock market has been rocked by a significant downturn in the stock price of Ola Electric, the electric vehicle (EV) arm of ride-hailing giant Ola. The company's shares, which were listed in August, fell below Rs 80 apiece in morning trade on Wednesday, October 23, 2024. This marked a significant downturn for the company, whose shares had rallied sharply after listing, reaching an all-time high of Rs 157.40.

The decline in Ola Electric's stock price has been attributed to a barrage of customer complaints regarding poor after-sale service. The company's flagship S1 series EV scooter has reportedly become a source of frustration for hundreds of customers, who have been consistently facing issues such as malfunctioning hardware, glitching software, and a scarcity of spare parts. These issues have resulted in inordinate delays, further exacerbating customer dissatisfaction.

Market experts have expressed concern over the company's performance, suggesting that the share may soon trade below its debut price of Rs 76. Jigar S Patel, Senior Manager- Technical Research Analyst at Anand Rathi Shares and Stock Brokers, stated that the support for Ola Electric would be at Rs 76 and resistance at Rs 86.

Ola Electric's Sales Figures and Market Position

However, the strong support of Rs 86 has already been broken, and the next target is Rs 75. The trend in the counter continues to be negative, indicating a bleak outlook for the company's stock. The company's sales figures have also been on a downward trajectory. According to data from the government portal Vahan, Ola Electric sold 24,665 e-scooters in September, down from 27,587 in August.

This decline in sales, coupled with service-related problems, has been identified as the primary reason for the fall in the company's share price. The situation is further complicated by the increasing competition in the EV market. Ola Electric's rivals, TVS Motor and Bajaj Auto, have been steadily increasing their market share. In September, Bajaj Auto's registrations rose to 19,103 units, up from 16,789 units in August, while TVS Motor registered 18,084 units, up from 17,649 units in August.

This has put additional pressure on Ola Electric, which has seen its market share drop to 27%. Market analysts have advised investors to stay away from Ola Electric's stock and instead invest in stocks with strong fundamentals.

Historical Similarities and Future Outlook

The company's stock remains weak, and selling is being seen at all levels. The stock closed marginally higher at Rs 81.76 at the end of the day, but the overall sentiment remains negative. This situation is reminiscent of similar instances in the past where companies have faced a decline in their stock prices due to poor customer service and product issues.

For instance, in 2018, Tesla faced a similar situation when it struggled with production issues and customer complaints regarding its Model 3 sedan. The company's stock price took a hit, but it managed to recover after addressing the issues and ramping up production.