Ola Electric Mobility Limited, one of India’s top electric two-wheeler manufacturers, has been dragged into a legal dispute by Rosmerta Digital Services Ltd, a vehicle registration agency and high-security number plate maker. Rosmerta has filed a petition at the National Company Law Tribunal (NCLT), Bengaluru, alleging a payment default of approximately INR 18-20 crore, and has sought to initiate the Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code (IBC).
Ola Electric had earlier stated, in February 2024, that it was renegotiating contracts with its vehicle registration agencies, which temporarily impacted registrations on the government’s vehicle registration portal. However, the company had assured that this process would not affect actual sales figures. Despite this, Ola’s reported sales data has raised concerns. While the Ministry of Road Transport and Highways website recorded 8,647 units sold in February, the company claims it sold over 25,000 units that month. As of March 13, Ola had registered sales of 5,208 units, aiming for a 50,000-unit monthly run rate to achieve EBITDA profitability.
Ola Electric has strongly denied Rosmerta’s allegations and has sought legal counsel to defend itself against the claims. This lawsuit comes at a time when the company is also under scrutiny from the Central Consumer Protection Authority (CCPA). The CCPA has requested additional documents regarding over 10,000 consumer complaints related to Ola’s products, adding to the growing regulatory pressure on the EV manufacturer.
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Despite these legal and regulatory hurdles, investors should assess Ola Electric’s valuation before making investment decisions. According to InvestingPro’s Fair Value feature, the fair value of Ola Electric stands at INR 50.1 per share, which is almost identical to the current market price (CMP) of INR 50.5. This suggests limited upside potential, indicating that the stock might be fairly valued at current levels.
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