Why Olectra Greentech Share Price is Rising

The entire auto industry (including auto ancillary) stands under the roof of a revolution with electric vehicles (EVs) at its epicentre.

Traditional vehicles run on combustible fuels, spread too much pollution, and the fuels are slowly getting extinct. Hence, the growing need for finding an alternative that put EVs at the centerstage.

Countries across the globe are extensively working on developing a robust EV system. India is no exception. Apart from the auto companies, others are also trying to capture a piece of the pie.

One notable EV manufacturer from the lot has stood out and has found favour among investors. The company is none other than Olectra Greentech.

The share price of Olectra Greentech rallied more than 15% in the past one week. Yesterday, the company hit a new 52-week high of Rs 940.6.

In the past one month, it has rallied 36.7% while it is up almost 5x in the past one year.

Let's find out what's driving the rally in Olectra Greentech shares and whether it has more steam left.

#1 Back-to-back order wins

Olectra Greentech is making notable progress in transitioning from combustion engine-based vehicles to EVs, as evidenced by the recent surge in EV sales during the March 2023 quarter and the significant order wins.

The adoption of electric vehicles in the bus segment is rapidly gaining momentum in India. The government aims to have 70% of commercial vehicles and 40% of buses electric by 2030.

On 8 March 2023, the company's subsidiary, Evey Trans, received two Letters of Award (LOAs) from Telangana State Road Transport Corporation (TSRTC) for 550 electric buses.

Earlier on 1 March 2023, the company announced that its first 6x4 heavy-duty electric tipper received India's first homologation certificate from the country's automobile regulatory agencies.

Further, the company unveiled a hydrogen bus in February 2023 in a technical partnership with Reliance Industries, which serves as a carbon-free alternative to conventional public transportation.

In May last year, the company won its biggest-ever order worth Rs 36.8 billion (bn) for supplying 2,100 electric buses from Brihanmumbai Electric Supply and Transport (BEST).

Meanwhile, the company is also expanding its product line in the e-mobility segment for 3-wheeler electric autos and electric trucks after leading the commercial run of electric buses.

That is why the company's shares are performing exceptionally well on Dalal Street, supported by strong order wins and strong financial performance.

#2 Healthy financial performance

Supported by various government measures, e-bus penetration in India has picked up over the past two years, albeit the overall industry volumes for buses also contracted during the pandemic period.

Olectra Greentech, being a pure EV bus manufacturer, was a prime beneficiary of rising EV bus sales in the country. Its financial performance reflects the same.

Olectra Greentech's Q4 revenue stood at Rs 3,764 million (m). This is 37% higher compared to the year ago period. Revenues saw a sharp jump on the back of increasing market demand.

The electric bus manufacturer posted a 52% year-on-year (YoY) rise in its consolidated net profit to Rs 270.1 m.

For the financial year 2023, the consolidated revenue increased 84% to Rs 10.9 billion (bn) compared to Rs 5.9 bn in the year-ago period. The rise in revenue indicates the increasing popularity of electric buses.

The consolidated net profit for the said year was up 86% at Rs 655.9 m as against Rs 353.5 m in the financial year 2022.

In the last three years, its revenue has increased by 97% while net profit has grown 188% on a compounded annual growth rate (CAGR) basis.

Olectra Greentech's Sales and Profit Growth (FY 2021-23)

Consistently improving financial performance has boosted investor confidence.

#3 Big growth plans

The company is slowly expanding its wings in the electric tipper sector.

During the March 2023 quarter, it started selling electric tippers. It is now focusing on introducing new models, and new product lines in electric tippers as well as buses.

The company has acquired 150 acres of land from Telangana State Industrial Infrastructure Corporation to set up a new greenfield plant.

The new plant will result in an expanded capacity of 5,000 electric vehicles per year and scalable up to 10,000 electric vehicles/year.

The company intends to strengthen its intercity/interstate private transport segment. It also plans to deploy electric TARMAC buses in airports.

How Olectra Greentech shares have performed recently

Olectra Greentech share price has given real multibagger returns in the last three years, rallying around 1,118%.

The stock is up 49.3% in the past one year.

Olectra Greentech touched its 52-week high of Rs 940.6 on 13 June 2023 and a 52-week low quote of Rs 374.4 on 23 February 2023.

At the current price, Olectra Greentech trades at a PE multiple of 105.5x and a price-to-book value multiple of 8.79x.

About Olectra Greentech

Olectra Greentech is India's largest pure electric bus manufacturer. The company's manufacturing facilities are in Hyderabad, India.

After leading in the commercial run of electric buses, the company is expanding its product line in the e-mobility segment for 3-wheeler electric autos and electric trucks.

Olectra Greentech is also an ISO-9001:2008 certified company. Its research & development (R&D) centre is recognised by the Department of Scientific and Industrial Research, Government of India.

To learn more about the company check out, Olectra Greentech's financial factsheet and quarterly results.

You can also compare the company with its peers

Olectra Greentech vs Insolation Energy

Olectra Greentech vs Ultra Wiring

Happy Investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...