Shares of Ola Electric Mobility witnessed a sharp decline on Wednesday, falling nearly 8% to Rs 63.71 amid concerns over the potential impact of a recent government decision on the electric two-wheeler market.

SoftBank Stake Reduction

SoftBank Group has sold a 2.15% stake in Ola Electric between July 15 and September 2, reducing its holding from 17.83% to 15.68%. The disposal involved 94,943,459 equity shares through SVF II OSTRICH (DE) LLC. This news, coupled with other market factors, contributed to the decline in Ola Electric's share price.

GST Reduction on ICE Two-Wheelers

The Indian government has announced a reduction in the Goods and Services Tax (GST) on two-wheelers with engine capacity up to 350 cc from 28% to 18%, effective September 22. This move, aimed at providing relief to consumers in the traditional internal combustion engine (ICE) two-wheeler segment, is expected to weigh on electric two-wheeler demand sentiment.

Market Reaction

The news triggered a significant sell-off in Ola Electric shares, with over 58 crore shares changing hands on the National Stock Exchange (NSE). The stock's performance marks a notable shift from its recent rally, which saw it surge 73% from its 52-week low of Rs 39.60 reached in July.

Analyst Outlook

Despite the day's decline, some analysts maintain a positive outlook on Ola Electric. Price targets ranging from Rs 90 to Rs 100 have been cited, with expectations of support from the new electric vehicle (EV) policy.

Recent Developments

Ola Electric recently received approval under the government's Production Linked Incentive (PLI) scheme for its Gen 3 S1 scooter lineup. This approval covers all seven Gen 3 S1 variants, which contribute to more than half of the company's total sales. The company is now eligible for incentives ranging from 13% to 18% of sales value until 2028, potentially offsetting some concerns about the GST reduction on ICE vehicles.

Financial Performance

In its most recent financial report, Ola Electric disclosed:

While the company faced a significant year-on-year revenue decline, it did see an improvement in gross margins.

As the electric vehicle market continues to evolve, investors will be closely watching how Ola Electric navigates the changing landscape, balancing government incentives for EVs against new pricing dynamics in the traditional two-wheeler segment.

Ola Electric Mobility , the electric vehicle arm of ride-hailing giant Ola, witnessed a significant uptick in its share price on Wednesday, marking a strong recovery trend that has been building over the past few trading sessions.

Share Price Surge

Ola Electric's shares jumped 10% on Wednesday, reaching ₹67.24 and inching closer to its initial public offering (IPO) price of ₹76 per share. This surge is part of a broader upward movement, with the stock gaining ground in five out of the last six trading sessions. Since August 22, the shares have appreciated by 42%.

Trading Volume Spike

The market's renewed interest in Ola Electric was evident in the trading volumes. Wednesday saw 75 crore shares changing hands, more than doubling the 20-day average of 30 crore shares. This surge in trading activity underscores the growing investor confidence in the company's prospects.

Technical Indicators

The recent rally has pushed Ola Electric's stock above all key moving averages, a bullish signal that often indicates strong momentum. However, investors should note that the stock has entered overbought territory with a Relative Strength Index (RSI) of 79, suggesting that the rapid price increase might be due for a consolidation.

Market Capitalization and Turnover

As the share price climbs, Ola Electric's market capitalization is approaching the ₹30,000 crore mark. The company has seen robust trading activity, with the three-day turnover previously exceeding ₹15,000 crore, highlighting the stock's liquidity and investor interest.

Monthly Performance

August proved to be Ola Electric's best month since its listing, with shares surging by 35%. This performance reflects growing optimism about the electric vehicle sector in India and Ola's position within it.

Investor Considerations

While the recent price action is encouraging for Ola Electric shareholders, it's important to note that the stock is still trading below its IPO price of ₹76. Investors should consider both the potential for continued growth in the EV sector and the risks associated with rapidly appreciating stocks, especially those in overbought territory.

As Ola Electric continues to navigate the competitive and evolving electric vehicle market, investors will be watching closely to see if the company can maintain its momentum and deliver on its promise in the burgeoning EV industry.