Ola Electric continued its upward trajectory on Monday soaring by 10% to hit the upper circuit after its price band was revised downwards.

What Happened: The price band for Ola Electric shares has been revised downward to 10%, meaning that the stock can only fluctuate by 10% in either direction.

Stock exchanges implement these price bands as a surveillance measure to control excessive volatility. The BSE’s circuit filter mechanism restricts daily price movements for listed securities by establishing upper and lower limits.

On Friday, the company's stock skyrocketed 20% despite weak first-quarter earnings, with the company's net loss widening 30% to ₹347 crore for the April to June period.

The stock has charged upwards as the firm marked its foray into electric motorcycles with the “Roadster” portfolio. Additionally, HSBC also initiated the coverage of Ola Electric with a “buy” recommendation and a target price of ₹140. 

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Ever since its debut on the bourses on August 9 at ₹76 apiece on the NSE and ₹75.99 per share on the BSE, the stock has gone up 60%. The stock price has nearly doubled within just six days of its IPO.

According to IIFL Securities, Ola Electric’s run is likely due to the consideration of few forward-looking factors. The brokerage expects the two-wheeler industry’s electrification to go up to 30% by 2030 compared to 6% currently. It also estimates Ola’s dominant market share to stay at about 40% and a continued EBITDA margin of around 15%.

However, the brokerage also notes that electrification rate in the electric two-wheeler industry has remained flattish in the 4%-6% range since reaching 6% in November 2022.

“In the past 1.5 years, the government has reduced fiscal incentive on 2W (two-wheeler) EVs from ₹45,000 per vehicle to ₹10,000. Over time, the government may cut incentives and possibly increase the concessional GST of 5% for EVs,” IIFL Securities added.

Price Action: Ola Electric was trading 10% higher at ₹146.03 on Monday morning.

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