From Rs 157 to just Rs 25: Ola Electric shares plunge 84% from peak. Should you catch this falling knife?

Ola Electric Mobility, the pure-play electric two-wheeler maker, has seen a dramatic 84% fall from its record peak of Rs 157. The stock had surged to that level in a post-listing frenzy after debuting at an issue price of Rs 76 in 2024. Since then, the sharp correction has wiped out nearly Rs 57,000 crore in investor wealth.

What stands out is the speed of the reversal. In less than two years since listing on Dalal Street, the stock now trades below Rs 30. It is not only far below its peak but also nearly 70% below its issue price, underscoring the depth of the decline.

The pressure on Bhavesh Aggarwal’s Ola is not limited to competition or a slowdown in demand. Regulatory compliance has also come under the scanner. Several Ola Electric showrooms and service centres in the past have been found operating without valid trade certificates and were directed to shut down by government authorities, particularly in states such as Maharashtra, The Economic Times had earlier reported.For investors, the situation raises difficult questions. Should one enter now to play the long-term story, or for existing shareholders, have the negatives already been priced in and is a potential bounce-back on the horizon?

Downgrades galore

On Thursday, international brokerage Goldman Sachs downgraded Ola Electric to Neutral and cut its target price to Rs 26 from Rs 52. The brokerage lowered its FY26 to FY28 revenue estimates and now factors in a mid-single-digit market share for FY30E and beyond, compared with its earlier expectation of market share in the low teens.

It expects that, at the revised pace of EBITDA losses and capital expenditure, the company’s cash burn could necessitate a fundraise over the next 12 to 18 months.

According to the brokerage, key steps required to improve the current business trajectory include building a sustainable and stable servicing operation, establishing a consistent senior leadership team across domains, and enhancing product reliability in the upcoming industry product launch cycle.

Just a week earlier, Citi downgraded Ola Electric to “Sell” from “Buy” and cut its target price by 51% to Rs 27 from Rs 55, citing persistent headwinds to volume growth.

The brokerage noted that EV penetration in India’s two-wheeler segment has been more sluggish than anticipated, with GST cuts further slowing the pace of electrification. Citi highlighted that Ola Electric has lost market share amid service-related challenges, intense competition, and adverse customer perception.

The company’s Q3 results came in below estimates, largely due to negative operating leverage. While the brokerage acknowledged the improvement in gross margins and said better operating leverage could support EBITDA going forward, it cautioned that management’s efforts to enhance product and service quality may take time to yield results.

Additionally, sustained negative cash flows could raise investor concerns about the balance sheet and rising net debt levels.

Market share woes continue

According to the Vahan website, Ola Electric’s market share in the electric two-wheeler segment fell to 6.3% in January from about 26% a year ago. In the first 18 days of February, the company sold 2,575 vehicles, further reducing its market share to about 4.2%.

Ola Electric, which was the market leader in the segment last year, currently trails behind legacy companies such as TVS Motor, Bajaj Auto and Hero MotoCorp, as well as new-age players like Ather Energy.

Physical presence to decline?

Ola Electric plans to reduce its physical store count further to about 550 by March-end, amid a sharp decline in market share and mounting operational challenges, an Economic Times report added.

The move marks a deeper pullback for the Bengaluru-based electric vehicle (EV) maker, just a year after it announced the expansion of its retail network to 4,000 stores nationwide.

In its latest quarterly update, Ola Electric said it had already pared its store network to 700 outlets as part of what it described as a “structural reset”.

Technicals flash weakness

Jigar S Patel, Senior Manager, Equity Technical Research at Anand Rathi Shares and Stock Brokers, said the stock is currently trading within a defined range, with immediate support placed at Rs 24 and resistance seen at Rs 27. A decisive and sustained move above Rs 27 could open the door for further gains towards Rs 29 in the short term. Hence, the expected trading range is projected between Rs 24 and Rs 29. However, the recent bearish crossover in MACD indicates weakening momentum and suggests caution. Therefore, we maintain a cautious stance and would turn constructive only after a clear breakout above Rs 27.

Sachin Gupta, Vice President of Research at Choice Broking, said the prevailing structure clearly indicates a “sell-on-rise” regime, as every minor pullback has been met with aggressive supply. Key psychological support levels at Rs 40 and Rs 30 were breached decisively, accompanied by elevated distribution volumes, a sign of continued selling pressure rather than routine profit booking.

At present, the price is trading well below all major moving averages, including the 50-day and 200-day SMAs, reinforcing the broader structural breakdown. Although the RSI (14) has slipped into deeply oversold territory around the 22 level, which could trigger a short-term technical rebound or a “dead cat bounce”, the larger trend remains firmly negative.

Importantly, the earlier support zone of Rs 28-Rs 30 has now transformed into a strong resistance band. Unless the stock manages to stabilise and build a sustainable base above this region, the path of least resistance continues to point lower, with the next potential downside zone placed around Rs 20-Rs 22.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)