Shares of electric bus manufacturer Olectra Greentech experienced a significant drop on Tuesday. As soon as trading began, Olectra's shares plummeted by approximately 12%, settling around ₹1,160. This sharp decline is attributed to the cancellation of a large order from the Maharashtra government.
Maharashtra Government Cancels ₹100 Billion Order
In July 2023, Olectra Greentech received a ₹100 billion order from the Maharashtra State Road Transport Corporation (MSRTC) for the supply, operation, and maintenance of 5,150 electric buses. This was its largest e-bus order to date. The order involved Olectra supplying electric buses to EV Trans Pvt Ltd (EVEY). However, due to missed delivery deadlines, Maharashtra's Transport Minister, Pratap Baburao Sarnaik, ordered the cancellation of the tender. The minister stated that Olectra was required to supply 1,000 buses by May 22nd, but failed to deliver a single one, raising serious concerns about future deliveries.
Following the minister's directive, investor confidence in the company plummeted, resulting in the 12% share price drop. On Monday, the company's stock closed at ₹1,348.10, but on Tuesday, it traded around ₹1,160. This decline reduced the company's market capitalization to ₹103 billion.
Olectra's Shares Have Previously Generated Substantial Returns for Investors
Despite the recent downturn, Olectra Greentech has been a multibagger stock. Over the past five years, the share has delivered a remarkable return of approximately 2,250%. An investment of ₹100,000 five years ago, held until now, would have grown to approximately ₹2.35 million.
What Lies Ahead for Investors?
The cancellation of the order by the Maharashtra government has raised significant questions about Olectra Greentech's future. While the company has yet to issue an official response, investors are advised to exercise caution in their investment decisions and await any official updates from the company.
Olectra Greentech is a major player in the electric vehicle sector and has experience with large-scale projects. It remains to be seen how the company will adapt its strategy following the order cancellation and regain investor trust.
