Ola Electric Share Price Plunges 4% Amid Intensified CCPA Probe & SEBI Warning; Should You BUY?

Ola Electric Mobility's shares took a hit, falling 4% to an intraday low of Rs 70.55 on the BSE, following an announcement from the Central Consumer Protection Authority (CCPA). The CCPA has sought additional documentation from the electric two-wheeler manufacturer as part of an ongoing investigation into the company's business practices.

According to an exchange filing made by Ola Electric on Friday, January 10, 2025, the company received a request for more information from the CCPA, continuing its investigation into consumer rights violations, misleading advertisements, and unfair trade practices. This follows a previous request from the CCPA, dated December 4, 2024, which gave the company 15 days to submit additional documents. In response to the CCPA's inquiry, Ola Electric emphasized that the directive would not impact its financial, operational, or other activities.

This latest development comes shortly after the Karnataka High Court granted a six-week extension to Ola Electric, allowing the company more time to respond to the CCPA's earlier show-cause notice, which was issued on October 8, 2024. In a previous filing, Ola Electric claimed to have resolved 99.1% of the 10,644 complaints it had received. Despite this, the regulatory pressure continues to mount, with the company's stock price experiencing sharp declines.

Earlier this week, the Securities and Exchange Board of India (SEBI) issued a warning to the company for violating disclosure regulations. This came after CEO Bhavish Aggarwal announced the company's expansion plans on social media before formally notifying the stock exchanges. This breach of protocol adds to the growing list of issues troubling the company, including top-level management exits and mounting consumer complaints about vehicle quality and after-sales service.

Ola Electric has seen several key executives leave the company recently. On December 27, the company's Chief Technology and Product Officer Suvonil Chatterjee and Chief Marketing Officer Anshul Khandelwal resigned, adding to the exodus of senior executives from across its entities. This includes Ola Electric, its artificial intelligence venture Krutrim, and the ride-hailing platform Ola Cabs.

The company's market share has also taken a hit, dropping by over five percentage points to 19.5% in December. This shift comes amid heightened competition from industry rivals such as Bajaj Auto, TVS Motor, and Ather Energy, the latter of which has recently received approval from SEBI to launch its own initial public offering (IPO). Ola Electric's struggles are compounded by consumer dissatisfaction, with increasing complaints regarding the quality of its electric vehicles and its after-sales support.

In response to these challenges, Ola Electric has made moves to boost its presence in the market. The company announced plans in December to open 3,200 new stores with service facilities, expanding its store network fourfold to a total of 4,000 locations across India. Additionally, Ola Electric has diversified its product portfolio, launching new electric scooter models, the S1 Z and Gig, aimed at gig economy workers and cost-conscious consumers. The company also unveiled its Roadster motorcycle series, with deliveries set to begin this month.

During its second-quarter earnings call, Bhavish Aggarwal revealed plans to launch 20 new products over the next two years across the two-wheeler and three-wheeler categories, with at least one new release each quarter. However, despite these aggressive plans, the company faces an uphill battle as it grapples with regulatory scrutiny, management turnover, and competition in the electric mobility space.

From a market perspective, Ola Electric's stock has been underperforming. The company's shares were trading at Rs 70.82 per share as of 1:40 pm on the National Stock Exchange, reflecting a 22% decline over the past month and a 20% drop in the last three months. The current market capitalization of the company stands at Rs 32,384 crore. However, according to Trendlyne data, the average target price for the stock is Rs 96, suggesting a potential upside of 31% from current market levels. A consensus recommendation from seven analysts is to 'Buy,' although the company's recent struggles may influence investor sentiment.