After receiving the PLI certification for S1 X 3 kWh and S1 X 4 kWh electric scooters, Ola’s share price surged by 4.4% to Rs. 143.80 on the BSE.
Key Highlights:
- 4 Ola electric scooters received a Domestic Value Addition Certificate for the PLI scheme.
- The certified S1 X (3kWh, 4kWh) models met the 50% localization criteria.
- Skeptical with the growth curve, analysts suggest waiting for a stable entry point.
Ola Electric has achieved a significant milestone by becoming the only two-wheeler electric vehicle (EV) manufacturer to receive compliance certification for four of its products under the Production-Linked Incentive (PLI) scheme at a time. This includes the affordable S1 X models with 3 kWh and 4 kWh batteries. The certification, awarded by the Automotive Research Association of India (ARAI), confirms that these models meet stringent minimum localization criteria of 50% mandated by the Ministry of Heavy Industries.
The PLI scheme was introduced in 2020 by the Indian government to boost domestic manufacturing of Electric Vehicles and minimize India’s dependence on imports from countries such as China. It was introduced with a vision to make EVs more affordable in India by cutting down on the import cost of Li-Ion batteries, BMS, and vehicle components.
Excited to share that the S1X 3 and 4 kWh scooters @OlaElectric have received the Domestic Value Addition (DVA) certification under Production Linked Incentive (PLI) Scheme. These two products make almost 50% of our orders. More wind in our sails as we build India’s EV future!
— Bhavish Aggarwal (@bhash) August 20, 2024
Under the PLI scheme, Ola Electric will receive incentives ranging from 13% to 18% of the determined sales value of the products for up to five consecutive financial years starting from FY2024. Upon receiving hefty incentives for electric scooters that contribute to almost half of its revenues, Ola Electric anticipates an improvement in its bottom line.
These PLI certifications for Ola electric scooters have significantly boosted investor confidence and driven the stock price upward by 4.41 percent to ₹143.80 on the BSE on 21 August 2024. The stock is up by 89.21 percent over its initial IPO price of ₹76.
This achievement is expected to have a further positive impact on Ola Electric’s financial performance in the upcoming days. The company stated that the S1 X 3 kWh and S1 X 4 kWh models contribute to almost half of its revenues.
In addition to the recent PLI certification for its electric two-wheelers, Ola Electric has also secured a 20GWh capacity allocation under the government’s PLI scheme for Advanced Chemistry Cell (ACC) Battery storage to receive incentives for five years starting from the operationalization of its Ola Gigafactory in Krishnagiri, Tamil Nadu.
The PLI certification came shortly after Ola Electric’s annual product launch event ‘Sankalp’ in Bengaluru, where the CEO, Bhavish Aggarwal introduced the ‘Ola Roadster’ series of electric bikes and teased upcoming models, Sportster and Arrowhead. Additionally, Aggarwal announced the rebranding of Ola Cabs as Ola Consumer and revealed plans for its text-based Krutrim AI to launch India’s first AI chips by 2026.
Even though Ola Electric achieved a positive milestone today, its stock price was unstable on August 20th. Ola Electric’s stock fell by 8%, trading at 14% below its highest price of ₹157.4. It closed the day down by over 6% at ₹137.38. Since its IPO launch, the stock has risen by 87% from its initial price of ₹76, doubling investors’ money.
It’s important to remember that Ola Electric started IPO as a company that was losing money. In June 2024, its losses increased by 30% compared to the previous year at Rs. 347 crore. However, its sales also grew by 32% to ₹1,644 crore in the same quarter. For the entire last year, Ola Electric’s losses were ₹1,584.4 crore, while its sales were ₹5,009.8 crore.
Despite the recent surge in share prices, financial experts are cautious about the stock’s long-term prospects. Vihaan Sharma, senior research analyst at Customer Market Insights stated that ‘While the company’s achievements are impressive, its ongoing losses and volatile stock price create a challenging environment for new investors. It might be wise to wait for a more stable market point before entering the trade’.
Ola Electric’s compliance certification for its four EV models marks a significant milestone in the company’s journey. With the PLI incentives in place, the company is on its way to enhance its financial performance and solidify its position in the Indian EV market. Investors and industry professionals will be closely watching how Ola Electric navigates its growth trajectory amidst market volatility.
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