Shares of Ola Electric opened in the red on Wednesday as it nears its IPO listing price of ₹76.

What Happened: Kotak Securities initiated coverage on the Bengaluru-based electric vehicle firm with a “reduce” call and a target price of ₹80.

Kotak sees the company’s market share slipping due to growing competition. Kotak’s thesis is also based on the risk factors arising from a spike in complaints about products and after-sales service, and its subsequent impact on the brand.

The company has faced severe flak for its after-sales service, with complaints reportedly rising to 80,000 per month. Earlier this month, the company’s CEO Bhavish Aggarwal was engaged in a war of words with comedian Kunal Kamra on X after the latter lashed out against the rising number of customer complaints around Ola’s service quality.

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Since then, the stock has declined in most sessions, with the Ola Electric share price dropping around 16%. The company’s market capitalisation was around ₹43,730 crore on Friday, October 4, but by Monday, it had fallen to about ₹36,660 crore, resulting in a loss of around ₹7,000 crore.

The Bengaluru-based electric vehicle firm had fallen over 9% in the last five trading session. Since its blockbuster listing on August 9, the stock has plunged by over 12%.

Despite the headwinds, the brokerage remains optimistic about the company’s growth prospects on the back of growing electric vehicle penetration in two-wheelers. Kotak sees electric two-wheeler penetration in India reaching 28% by FY30.

Besides, the company’s end-to-end vertical integration is also expected to help increase its profit margins, Kotak noted. It anticipates a 30% annual revenue growth rate from FY24 to FY28.

Price Action: Ola Electric’s shares inched 1.22% lower to ₹80.09 on Wednesday morning.

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