business · 2026-10-10
Ola Electric shares fall 4% on Rs 1,000 crore rights issue plan
Photo: via The Economic Times
Ola Electric's stock dropped 3% after it approved a Rs 1,000 crore rights issue to fund operations. The company's losses last year were Rs 1,829 crore, more than the issue can cover.
What is Ola Electric's Rs 1,000 crore rights issue?
A rights issue lets a company raise cash by selling new shares to its existing shareholders, in proportion to what they already own. Ola Electric's board approved one on October 7 2026: it will sell 37,02,72,665 new shares at Rs 27 each, raising Rs 999.74 crore. Current holders get 2 new shares for every 25 they hold, priced below the market rate of about Rs 35, with the record date set for October 13. That discount is the incentive to invest more.
Why did Ola Electric shares fall after the rights issue?
Shares fell because a rights issue asks existing shareholders to put in more cash, and it dilutes their stakes. Ola Electric is issuing millions of new shares at Rs 27 each, well below the market price. Investors saw this as a request for money from an already struggling company, sending the stock down 3.63% to Rs 35.
Is Ola Electric betting on cheaper in-house batteries?
Yes. Ola Electric says the Rs 1,000 crore rights issue will fund vertical integration, especially commercialising its in-house Bharat Cell LFP battery technology, launched in August 2026 to lower battery costs. The new S1Z scooters use these cheaper in-house cells.
What happened to Ola Electric's Rs 6,000 crore IPO money?
Ola Electric's Rs 6,145.56 crore IPO money has been spent on building factories, developing new products and expanding its network. The company still lost Rs 1,829 crore in fiscal 2026, so the cash was used up keeping operations going, which is why it now needs another Rs 1,000 crore via a rights issue.
Who can buy shares in Ola Electric's rights issue?
Only existing shareholders of Ola Electric can buy shares in the rights issue, the company's current investors. Each eligible shareholder gets the right to buy 2 new shares for every 25 shares they own as of the record date, October 13. The rights issue price is set at Rs 27 per share, a discount to the market price that acts as the incentive for current investors to put in more money before the offer closes on October 30.
How does a company survive burning cash yearly?
A company burning cash survives by raising more money from investors. Ola Electric is doing this through a rights issue to raise Rs 999.74 crore, which its shareholders can subscribe to. The funds are meant for vertical integration, especially commercialising its in-house Bharat Cell LFP battery technology to lower costs. Its promoter, Bhavish Aggarwal, has committed his own stake to fund his portion.
What questions did regulators ask about Ola Electric's data?
SEBI (Securities and Exchange Board of India) emailed Ola Electric in April, May and June 2025 arguing for clarifications on discrepancies between its sales and delivery figures, how it treated customer down payments, plus gaps between VAHAN (the government vehicle registration portal) records and company data. Stock exchanges also probed a February 2025 discrepancy, where Ola clarified that a25,000-unit figure was for pre-orders, not actual sales.
Can Ola Electric turn around as competitors innovate?
Whether Ola Electric can turn around is uncertain. The company lost Rs 1,829 crore in fiscal 2026 and faces intense competition from Bajaj Auto, TVS Motorand Ather Energy. It is raising Rs 999.74 crore through a rights issue, at Rs 27 per share, to fund cheaper in-house Bharat Cell LFP batteries. But regulators have questioned its sales reporting, and the stock remains down about 62% from its listing price. Market verdict: not yet convinced.
Source: economictimes.indiatimes.com