Ola Electric Share Price Drops 4% Amid Insolvency Proceedings Filed by Rosmerta Digital Services
Ola Electric faced a sharp decline in its share price during Monday’s trading session, slipping nearly 4% after Rosmerta Digital Services Ltd, a vehicle registration service provider, announced its intent to initiate insolvency proceedings against Ola Electric Technologies Pvt Ltd, a wholly-owned subsidiary of Ola Electric Mobility. This news has raised concerns among investors and market analysts, further intensifying the downward trajectory of Ola Electric’s stock.
Insolvency Petition Against Ola Electric Technologies
In a regulatory filing, the company disclosed that Rosmerta Digital Services Ltd, an operational creditor, has filed a petition under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016. The petition, submitted to the Bengaluru Bench of the National Company Law Tribunal (NCLT), alleges that Ola Electric Technologies defaulted on payments for services provided by Rosmerta. Consequently, Rosmerta has requested the initiation of the corporate insolvency resolution process (CIRP) against the company.
Its Mobility has responded to the claims, stating that it has sought appropriate legal counsel and strongly disputes the allegations. The company reassured stakeholders that it will take all necessary legal measures to challenge the insolvency proceedings and protect its interests.
Strategic Moves and Financial Struggles
This development comes at a time when the company has been restructuring its agreements with Rosmerta Digital Services Pvt Ltd and Shimnit India Pvt Ltd to optimize expenses and enhance the efficiency of its vehicle registration processes. Despite these cost-cutting efforts, the company’s financial health has been under scrutiny due to growing competition and operational challenges.
Ola Electric Share Price Performance
On Monday, it’s stock opened at ₹50 per share on the Bombay Stock Exchange (BSE), reaching an intraday high of ₹50.16 before falling to an intraday low of ₹48.61. Market analysts believe that the stock is currently in a bearish phase, reflecting a prolonged downtrend.
Anshul Jain, Head of Research at Lakshmishree Investment and Securities, pointed out that it’s share price has fallen below its IPO base of ₹76, confirming a downtrend with lower highs and lower lows. Since reaching a post-IPO high of ₹157, the stock has steadily declined, with analysts now eyeing ₹34 as the next critical support level unless a strong reversal occurs.
Q3 Financial Results: Deepening Losses
Ola Electric Mobility recently reported its Q3 results for the fiscal year ending December 31, 2024, showing a widening net loss of ₹564 crore, compared to a net loss of ₹376 crore in the same quarter last year. The company attributed this decline to increased competition and one-time service-related expenses.
Revenue from operations also took a hit, dropping to ₹1,045 crore, compared to ₹1,296 crore in the prior-year quarter. However, Ola Electric reported its highest-ever electric two-wheeler (e2W) registrations, with 3.33 lakh units sold, reflecting a 37.5% year-over-year increase.
Company’s Key Financial Ratios
| Financial Metric | Value (Q3 FY25) | Value (Q3 FY24) |
|---|---|---|
| Net Loss | ₹564 crore | ₹376 crore |
| Revenue | ₹1,045 crore | ₹1,296 crore |
| e2W Registrations | 3.33 lakh units | 2.42 lakh units |
| IPO Base Price | ₹76 | N/A |
| Post-IPO High | ₹157 | N/A |
| Current Stock Price | ₹48.61 | N/A |
| Next Support Level | ₹34 | N/A |
Investor Outlook and Market Sentiment
Given the legal complexities surrounding the insolvency case and the company’s ongoing financial struggles, investors remain cautious. Analysts suggest that it’s stock may continue facing selling pressure, particularly if no positive developments emerge in the coming weeks. Traders are advised to closely monitor legal proceedings and corporate announcements before making investment decisions.
Q&A: Understanding the Ola Electric Stock Drop
Q1: Why did Ola Electric’s share price drop by 4%? A: The decline followed news that Rosmerta Digital Services Ltd filed an insolvency petition against Ola Electric Technologies Pvt Ltd, raising concerns about the company’s financial health.
Q2: What legal action has been taken against Ola Electric? A: Rosmerta Digital Services Ltd has filed a petition under Section 9 of the IBC, claiming non-payment for services and seeking corporate insolvency resolution.
Q3: How has Ola Electric responded to the insolvency claims? A: Ola Electric has stated that it disputes the allegations and has engaged legal counsel to challenge the claims.
Q4: What is the current trend of Ola Electric’s stock? A: Analysts have confirmed a bearish trend, with the stock breaking below its IPO base of ₹76 and eyeing a support level of ₹34.
Q5: What were Ola Electric’s Q3 financial results? A: The company reported a net loss of ₹564 crore, a revenue decline to ₹1,045 crore, but saw record electric two-wheeler registrations at 3.33 lakh units.
Q6: Should investors be worried about Ola Electric’s stock? A: Investors should remain cautious due to legal uncertainties and financial struggles. Analysts recommend monitoring the company’s legal proceedings and market performance before making investment decisions.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.