Ola Electric shares plunge as insolvency petition sparks investor concerns.
Ola Electric shares plunge as insolvency petition sparks investor concerns.

Summary

The insolvency petition comes at a challenging time for Ola Electric. The company is also facing financial pressure, having reported a net loss of โ‚น564 crore in Q3 FY25.

NEW DELHI: Ola Electricโ€™s stock dropped sharply on Monday, hitting a 52-week low of โ‚น46.94. The decline came after the company disclosed that an insolvency petition had been filed against its subsidiary, Ola Electric Technologies Pvt Ltd.

The petition was filed by Rosmerta Digital Services Ltd, an operational creditor. The company alleged default in payment for services rendered. The matter has been submitted to the National Company Law Tribunal (NCLT) Bengaluru Bench under Section 9 of the Insolvency and Bankruptcy Code, 2016.

Ola Electric Mobility, the parent company, strongly disputes the claims. โ€œWe have taken legal advice and will take all necessary steps to protect our interests and object to the allegations in the aforesaid matter,โ€ the company said in a statement.

Rosmerta Digital Services is a subsidiary of Rosmerta Technologies Ltd. The company specializes in digital services related to the automotive sector. It provides high-security registration plates (HSRP) and other vehicle-related solutions.

The insolvency petition comes at a challenging time for Ola Electric. The company is also facing financial pressure, having reported a net loss of โ‚น564 crore in Q3 FY25.

This was higher than the โ‚น376 crore loss recorded in the same period last year. Net sales also declined by 19.37% year-on-year to โ‚น1,045 crore in Q3 FY25.

Ola Electricโ€™s stock has seen a sharp decline since its IPO debut in August 2024. The share price has dropped over 65% from its peak. On Monday, the stock fell 7.12% to โ‚น46.94 on the BSE and 7.04% to โ‚น46.95 on the NSE.

Amid these troubles, the company is undergoing a major restructuring process. Ola Electric is reportedly cutting around 1,000 jobs across various departments to reduce losses.

Market experts believe the company must boost its sales volume to win back investor confidence. โ€œIf it doesnโ€™t regain its sales volume at this juncture when the entire EV space is about to pick up, then there is a serious flaw with the acceptability of its products,โ€ said Vinit Bolinjkar, Head of Research at Ventura Securities.

Technical analysts have also expressed concern about the stockโ€™s performance. โ€œThe counter has been in a downward trend and traded in the oversold category on daily charts. We will wait for a trend reversal,โ€ said Vaishali Parekh, Vice-President (Technical Research) at Prabhudas Lilladher.