Major Selloff Pressure Hits EV Giant as 182 Million Shares Become Eligible for Trading in Market, Raising Concerns for Tamil Nadu’s Manufacturing Hub
The shares of Ola Electric Mobility Ltd., one of Tamil Nadu’s flagship electric vehicle manufacturers, plummeted over 9% on Thursday, hitting a 52-week low of Rs 73.70 on the BSE. This significant drop pushed the company’s stock below its initial public offering (IPO) price of Rs 76, coinciding with the expiration of a crucial three-month lock-in period.
The end of this lock-in period means approximately 18.2 crore (182 million) shares, representing 4% of the company’s total equity, are now eligible to be sold on the open market. This development has triggered concerns about potential increased selling pressure on the stock in the coming days.
Lock-in Expiration Creates Market Pressure
The three-month share lock-in period, a standard practice following IPOs, restricted certain shareholders from selling or transferring their shares to prevent market volatility and sudden sell-offs. With this restriction now lifted, market analysts are closely monitoring trading patterns for signs of institutional selling.
“The expiration of the lock-in period typically creates short-term volatility as previously restricted shares become tradable,” explained Ramesh Venkataraman, Senior Investment Analyst at Chennai-based Southbridge Capital. “For Ola Electric, this comes at a particularly challenging time as the company is still working to establish consistent production and delivery numbers from its Tamil Nadu gigafactory.”
The stock’s performance has been concerning for investors, with shares declining by 21.54% over the past month and 4.14% in the last two weeks. This contrasts sharply with the initial market response, when shares had surged nearly 2% to Rs 77.84 from the IPO price band of Rs 72-76.
Tamil Nadu Manufacturing Hub Implications
The stock decline raises questions about the stability of Tamil Nadu’s electric vehicle manufacturing ecosystem, which has positioned itself as India’s EV production hub. Ola Electric’s massive gigafactory in Krishnagiri district represents one of the largest investments in the state’s manufacturing sector in recent years.
“What happens with Ola Electric has ripple effects throughout Tamil Nadu’s EV supply chain,” said Dr. Lakshmi Narayanan, Director of the Tamil Nadu Electric Vehicle Policy Research Institute. “The company’s performance directly impacts hundreds of component manufacturers, technology providers, and thousands of skilled workers across the state who have aligned their business strategies with Ola’s growth projections.”
The company’s gigafactory, which aims to reach an annual production capacity of 10 million electric scooters, has created an extensive ecosystem of suppliers and service providers within the state. According to data from the Tamil Nadu Industrial Development Corporation, over 45 ancillary businesses have established operations near the gigafactory, collectively employing approximately 8,000 workers.
Financial Results Anticipated
Amid the market turbulence, Ola Electric Mobility has announced that its Board of Directors will meet on November 8 to consider and approve the unaudited standalone and consolidated financial results for the quarter and half-year ended September 30, 2024. These results, along with the Limited Review Report from the company’s auditors, could significantly influence investor sentiment.
S. Krishnan, Chief Financial Strategist at Chennai Tech Ventures, noted, “The upcoming financial results will be crucial for Ola Electric to demonstrate progress on key metrics like unit economics, production efficiency, and revenue growth. Investors will be particularly focused on any signs of path to profitability, which remains the biggest question mark for many EV manufacturers in India.”
Broader Ecosystem Impact
The challenges facing Ola Electric come at a critical juncture for Tamil Nadu’s startup ecosystem, which has been working to diversify beyond software services into manufacturing-led ventures. The state government has invested significantly in developing specialized industrial corridors and policy frameworks to support electric mobility companies.
According to the Tamil Nadu Startup and Innovation Policy 2023 data, the state has seen a 34% increase in manufacturing-focused startups over the past two years, with electric mobility representing the largest segment at 42% of new ventures. Ola Electric’s performance on public markets is being watched as a bellwether for investor confidence in the sector.
The company’s gigafactory in Krishnagiri district is projected to create over 10,000 direct and indirect jobs when operating at full capacity, making it a cornerstone of the state’s economic development strategy.
Looking Ahead
As Ola Electric navigates this challenging period, market analysts suggest the company needs to focus on operational execution and transparent communication with investors to rebuild confidence.
“The expiration of the lock-in period creates short-term pressure, but the long-term trajectory depends on Ola’s ability to demonstrate manufacturing excellence and sustainable growth,” said Venkataraman. “For Tamil Nadu’s EV ecosystem to thrive, its flagship companies need to show that they can convert innovation into financial sustainability.”
With the electric vehicle industry still in its early growth phase in India, Ola Electric’s ability to weather this market volatility will have significant implications not just for its shareholders but for the entire manufacturing-led startup ecosystem that Tamil Nadu has been cultivating.
