Ola Electric shares have seen a decline of over 12% in two days, attributed to SVF II Ostrich (DE) LLC, an entity linked to SoftBank, selling its stake. Meanwhile, Goldman Sachs has expressed confidence in the company by setting a new target of ₹72. The company has received approval for the PLI scheme and is preparing to launch new vehicle models.
Goldman Sachs Target: Ola Electric shares have recently witnessed a significant drop. On Friday, September 5th, the stock closed 6% lower at ₹60.58, marking a total decline of over 12% in two days. The primary reason for the decline is the stake sale by SoftBank's unit, SVF II Ostrich (DE) LLC, which reduced their holding from 17.83% to 15.68%. In the meantime, Goldman Sachs has maintained its ‘Buy’ rating on the company and set a target of ₹72. The company has reduced its battery project capacity to 5 gigawatts and is preparing to launch new scooter models next year after receiving approval for the PLI scheme.
Company Linked to SoftBank Sells Stake
The major reason behind this fall in shares is reportedly the stake sale by SVF II Ostrich (DE) LLC, a company associated with SoftBank. According to information, 94.9 million equity shares were transacted between July 15th and September 2nd. During this period, SoftBank's stake decreased from 17.83% to 15.68%. Following the news of a large volume stake sale, market pressure increased, and investors began booking profits.
Recent Rally and Current Slump
Interestingly, Ola Electric shares had registered a remarkable rally of up to 46% in just six trading sessions between August 22nd and September 3rd. During this time, investor confidence in the company had grown, and the stock saw a surge with tremendous volume. However, the first week of September saw a sudden onset of selling pressure. The stock has closed in the red on three out of the last five trading days.
Goldman Sachs' Confidence Remains Strong
Despite the decline, global brokerage firm Goldman Sachs has maintained its ‘Buy’ rating on Ola Electric. The firm has set a new price target of ₹72 for the stock. The brokerage house believes that although there are fluctuations in the share price currently, the company has long-term growth prospects.
Business Changes
Ola Electric has announced a change in its battery cell manufacturing project. Previously, the company aimed to achieve a capacity of 20 gigawatts by 2030. However, this has now been reduced to 5 gigawatts. Industry experts believe this decision has been taken to better manage the company's strategy and capital expenditure.
PLI Scheme to Provide Support
The company has received approval for the Production-Linked Incentive (PLI) scheme for its Generation-3 vehicle models. The incentives provided by the government under this scheme will strengthen Ola Electric's production and business expansion. The company plans to launch a new series of performance scooters early next year.
Currently, the share is trading at ₹60.58, which is significantly below its IPO price of ₹76. Market experts suggest that the changes in large investors' holdings and amendments to business plans are impacting the stock.
