Ola Electric shares fall over 4% as analyst retains 'reduce' rating, sees 37% downside

Shares of Ola Electric Mobility fell more than 4% on Tuesday, September 29, as HSBC maintained its "reduce" rating on the electric two-wheeler maker, citing execution and brand-rebuilding risks despite progress on battery manufacturing and localisation.

The brokerage's target price of ₹24 per share implies a downside of around 37% from Monday’s closing price of ₹37.86.

HSBC said Ola Electric’s Giga Factory is accelerating battery manufacturing and localisation. It expects battery yields to improve from around 70% currently to approximately 90% over the next six to nine months.

According to the brokerage, greater automation and vertical integration could support the management’s margin improvement targets. However, HSBC identified brand rebuilding and execution as key monitorables.

Ola Electric rights issue

Ola Electric has scheduled a board meeting for October 5, subject to receipt of in-principle approvals from the stock exchanges or other required regulatory authorities.

The board will consider and decide various terms of a proposed rights issue of partly paid-up equity shares to raise up to ₹1,000 crore. The matters under consideration include the rights issue price, payment mechanism, rights entitlement ratio, record date and timing of the issue.

Analyst consensus and stock movement

According to Bloomberg analyst data, six of eight analysts tracking Ola Electric Mobility have a "sell" rating, while two have a "hold" rating and none have a "buy" rating. The 12-month consensus target price is ₹29.14, below the stock’s current trading level.

Shares of the company fell a bit over 4% on Tuesday, to an intraday low of ₹36.30, but have since given back all the losses and were trading near the day's high at ₹38.01, up 0.4%, around 2 pm. The stock is up 1.2% year-to-date, while delivering a negative 30% return over the last 12 months.

Also read: Indigo shares gain as Goldman Sachs remains positive, sees 21% upside — Here's why

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