Ola Electric shares tank over 7% in early trade ahead of Q1 results

The decline in Ola Electric's stock comes ahead of the release of the company's results for the first quarter of financial year 2024-25 (Q1FY25).

The stock has zoomed since its listing on Friday, hitting the 20% upper circuit in two consecutive trading sessions.

On Wednesday, the scrip opened in the green at ₹110 apiece on the National Stock Exchange (NSE), up 1.7% as against the last closing price.

However, shortly after the trading progressed, the stock began to decline. It slipped to a low of ₹100.36 at around 9:37 am, which marked a decline of 7.2% as compared to the previous session's close.

By 10:11 am, Ola Electric recovered some of the losses. The company was trading 1.95% lower at ₹106.18 per share on the NSE.

Up 39% against listing price

However, the stock soared by 20% in the post-listing trading on Friday and Monday. Some of the gains were pared on Tuesday.

Notably, the ₹6,145-crore initial public offering of Ola Electric received 4.27 times subscription. The issue was open for from August 2 to August 6. The initial share sale had a price band of ₹72-76 a share.

The IPO, first by an electric vehicle maker in India, had a fresh issue of up to ₹5,500 crore and an offer-for-sale (OFS) component of up to 8,49,41,997 equity shares.

According to its prospectus, Ola Electric plans to utilise ₹1,227.6 crore out of the proceeds of its ₹5,500-crore public issue on capacity expansion of its cell manufacturing plant to 6.4 GWh from 5 GWh.

The company is also looking to use ₹1,600 crore from the fresh fund on research and product development, another ₹800 crore will be deployed to repay debts and ₹350 crore for organic growth initiatives.

In its Red Herring Prospectus (RHP), OEML said the Phase 1 (a) and Phase 1 (b) of the set up and expansion of the Ola Gigafactory at Krishnagiri district in Tamil Nadu will be funded from internal accruals and long-term borrowings availed by its arm Ola Cell Technologies Private Ltd (OCT).

The company said a portion of the proceeds will be used for capital expenditure to be incurred by OCT for expansion of the capacity of cell manufacturing plant from 5 GWh to 6.4 GWh.