Ola Electric shares fall 5% after auditors flag penalty provision reversal in Q1

Shares of Ola Electric Mobility Ltd. fell as much as 5% on Monday, August 10, as they will be reacting to their June quarter results, and also an issue flagged by the company's auditor.

The company's auditor, in its P&L statement's notes to accounts for the quarter, said that Ola Electric had reversed a penalty provision worth ₹57 crore during the quarter, which enabled the net losses to appear narrower on a year-on-year basis.

"During the quarter ended 30 June 2026, OCTPL has reversed the entire provision and recognised a corresponding credit within other expenses in the Statement of unaudited consolidated financial results and have not created any provision for the quarter ended 30 June 2026 on the basis that it had submitted a request to MHI seeking an extension of time for compliance with the investment milestone and a waiver of the related liquidated damages. As at June 30, 2026, approval from MHI in respect of such request had not been received," the auditor note said.

Without this approval, the auditors have said that they could not verify whether reversing this provision was justified or not.

Ola Electric was selected for a PLI scheme four years ago, and it was mandated to invest ₹225 crore per GWh capacity within two years. It then sought more time to comply and a penalty provision was made during the March quarter. However, no new provisions have been made in the June quarter after the said reversal.

For the June quarter, Ola Electric Mobility's net loss and Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) loss narrowed from last year, but revenue was down 45% on a year-on-year basis.

No "buy" Ratings On Ola Electric

Brokerage firm Kotak Institutional Equities has a "sell" rating on the stock with a price target of ₹20, which projects the stock to halve from current levels.

Kotak said that while servicing-related issues have been addressed, the sustenance of volume recovery needs to be seen as its brand equity remains weak.

Despite the QIP, Ola Electric's Free Cash FLow poses another challenge and if the current volume trajectory does not improve, it will need to raise further capital, Kotak's note said.

Goldman Sachs has a "neutral" rating on the stock with a price target of ₹40.

The brokerage said that cell unit capex will continue for the next one to two quarters to ramp-up capacity, beyond which, capex is likely to remain in the ₹50 crore range.

Ola Electric is also going to announce the first set of dealers within the dealer-based distribution model on September 4 this year.

None of the eight analysts having coverage on Ola Electric Mobility have a "buy" rating on the stock. Two of them say "hold", while six others have a "sell" rating.

Shares of Ola Electric Mobility had ended 1% lower on Friday at ₹41.03. The stock is up 86% from its record low levels of ₹22.