Saad Ullah
Ola Electric (Ola) shares fall 4% after the end of the anchor lock-in period, with 18.18 crore shares now free for trade.
Ola Electric Mobility, the leading electric two-wheeler manufacturer in India, witnessed a 4% drop in its share price following the end of the anchor lock-in period. On Monday, September 6, Ola's stock hit a low of Rs 105.10 on the Bombay Stock Exchange (BSE), marking a sharp decline. This significant movement in the share price was triggered by the release of 18.18 crore shares, which were locked in by anchor investors.
The anchor lock-in period is a regulatory requirement, ensuring that shares purchased by anchor investors remain stable in the market. For Ola Electric, 50% of the anchor-held shares were locked for 30 days and the other half for 90 days following its Initial Public Offering (IPO). This process aims to protect stock prices from sharp fluctuations post-listing, but the recent unlock has opened the door for potential market volatility.
Ola Electric's IPO and Strong Investor Response
Ola Electric had a successful public offering, raising Rs 2,763 crore from top anchor investors before opening for public subscription on August 2. Among the major investors participating in the anchor round were marquee names like Nomura, Fidelity, HDFC Mutual Fund, Franklin Templeton, and BNP Paribas MF. The company's IPO was a fresh equity sale of 57.95 lakh shares, receiving overwhelming interest with subscriptions exceeding 150 times the initial offer.
Though the stock had a somewhat subdued debut at Rs 76, it quickly gained momentum. In just one week, the share price surged to an all-time high of Rs 157.53, briefly pushing the company's valuation above even Elon Musk's Tesla, listed on Wall Street. Despite this rapid rise, recent performance has shown volatility, especially as the lock-in period ended.
Brokerage Targets for Ola (Ola) Electric Stock
Despite the current decline, brokerage firms remain optimistic about the future potential of Ola Electric (Ola). Domestic firm Anand Rathi is bullish, forecasting a 54% upside with a target price of Rs 170. Global giant HSBC also initiated coverage shortly after the company's listing, setting a more conservative target of Rs 140 for the stock.
The company's financial performance also reveals mixed results. For the first quarter ending in June 2024, Ola reported a 32% year-over-year (YoY) increase in revenue. However, its losses widened to Rs 347 crore, compared to Rs 267 crore for the same period the previous year.
Market Performance and Recent Trends for Ola Electric
In the past month, Ola's stock has climbed by 15%, demonstrating positive investor sentiment despite recent fluctuations. However, over the last two weeks, the stock price has seen a decline of 16.2%. This drop can be attributed to multiple factors, including the release of locked-in shares and evolving market conditions.
As Ola Electric continues to evolve, investors will be keeping a close eye on both the company's financial health and its stock's future trajectory.
Conclusion
While Ola Electric (Ola) has faced a recent downturn due to the end of the anchor lock-in period, investor optimism remains high with various brokerages projecting significant growth. The company's strong revenue performance and ambitious future targets suggest potential, even amid market fluctuations. Investors will need to monitor ongoing trends to gauge long-term prospects.
Saad Ullah
