Ola Electric closed Tuesday at Rs 45.70 on BSE, up 8.8%, after nearly 2,482.59 lakh shares worth Rs 1,086.38 crore changed hands on NSE. The rally followed a lackluster Monday, when the stock slipped 0.3% even as the Nifty Auto index surged 4.2% on optimism that potential GST cuts could boost car and two-wheeler demand.
Prime Minister Narendra Modi said last week that the government plans to lower GST rates on several goods and services by Diwali. Proposals under discussion include slashing GST on small cars to 18% from 28%, according to Reuters.
HSBC Global Research said a cut “may positively impact auto demand, though OEM-wise impact may vary,” while cautioning it could be negative for EVs if some states respond by raising road taxes.
Nomura echoed the concern, noting that “if the GST cut on ICE happens, it is likely to significantly impact EV adoption… as the price gap between EVs (taxed at 5%) and ICE (taxed at 28% plus cess) would increase sharply.”
The policy uncertainty comes as Ola Electric is already battling weak financials. For the quarter ended June 30, the company posted a consolidated net loss of Rs 428 crore, up 23% year-on-year, while revenues halved to Rs 828 crore. EBITDA losses widened to Rs 237 crore, with margins slipping to -28.6% from -12.5% a year earlier.
Technical picture
Despite pressures, some analysts see signs of bottom formation. “Ola Electric has been consolidating near the Rs 39 support zone over the past few weeks, with multiple Doji candles signaling price stabilization,” said Laxmikant Shukla, Technical Analyst at YES Securities. He added that a move above the 50-day SMA suggests “a pullback from current levels,” with a buy range of Rs 43-44 and a stop-loss at Rs 39.
Anuj Gupta, Director at Ya Wealth, noted that “Ola is in the oversold zone. A recovery is expected, and the risk-reward looks favorable. Strong support lies at Rs 39, and the stock has potential to rise. Its lifetime high was Rs 157.40.”
Mandar Bhojane, Senior Technical & Derivative Analyst at Choice Broking, said the stock “has formed a falling channel and is now on the verge of a breakout with strong volumes.” He added that sustaining above Rs 46 could open the way for targets of Rs 52.5 and Rs 57.5.
Long-term story
From a fundamental perspective, some view Tuesday’s rebound as evidence that investors are looking past near-term uncertainty. “The stock’s performance underscores the market’s focus on operational execution and the company’s expansion trajectory rather than short-term policy noise,” said Anirudh Garg, Partner and Fund Manager at INVasset PMS.
Garg cautioned that a GST cut on small cars and two-wheelers could pose “a near-term challenge” by making ICE vehicles cheaper but argued that Ola’s long-term strategy remains intact, pointing to its Gen-4 platform spanning electric cars, rickshaws, and light commercial vehicles.
“The recent intra-day surge of over 10% reflects confidence in the company’s expansion plans,” he added, highlighting near-term resistance at Rs 55-57 and support at Rs 41-42.
Investors weigh risk and reward
Ola Electric shares continue to trade below long-term averages, with the Relative Strength Index at 48.5 and MACD at -0.6, signaling lingering bearish undertones. Yet analysts note growing participation from both retail and institutional investors.
“The near-term correction has created a lower entry point, and for investors with a medium-to-long-term horizon, the stock offers attractive potential relative to the current risk,” Garg said.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)