Friday, February 20: Shares of Ola Electric Mobility Ltd declined in early trade after a media report stated that the company plans to significantly reduce its physical store network.
The stock was trading at Rs 27.03, down 1.74% or Rs 0.48 in the morning session.
According to an ET report citing sources, the company plans to cut its physical stores to 550 by the end of March, a sharp reduction from the aggressive expansion undertaken just over a year ago. The electric two-wheeler maker had expanded its network four-fold to 4,000 stores across India. As of December 2, 2024, it had 800 company-owned stores.
On December 25, the company had announced the opening of over 3,200 new stores, each co-located with service centres, following CEO Bhavish Aggarwal’s expansion target.
Earlier this week, brokerage firm Citi downgraded the stock to “sell” from “buy” and slashed its target price by 51% to Rs 27 from Rs 55. Citi cited slower-than-expected EV penetration in India’s two-wheeler segment, GST cuts on internal combustion engine vehicles narrowing the price gap, market share losses and service-related challenges. The brokerage also noted that the company’s third-quarter performance was below estimates due to negative operating leverage.
Separately, the Bombay High Court at Goa stayed an arrest warrant issued against CEO Bhavish Aggarwal by the District Consumer Commission of South Goa in connection with a consumer complaint.
The stock has fallen 17% in the past month and 49% over the last six months, reflecting sustained selling pressure.
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