Olectra Greentech shares stare at selloff amid e-bus order cancellation worries

Shares of Megha Engineering and Infrastructure-promoted Olectra Greentech Ltd are in focus on Tuesday morning after Maharashtra's Transport Minister Pratap Baburao Sarnaik asked officials to cancel the tender order awarded to the electric bus manufacturer for failing to meet delivery timelines.

In the pre-open trade, the scrip was down 4.78 per cent at Rs 1281 apiece today at 9.05 am.

To recall, the Hyderabad-based company had in July 2023 informed stock exchanges that a consortium of Olectra and Evey Trans Private Limited (EVEY) received a letter of intent from MSRTC, relating to supply, operation and maintenance of 5, 150 electric buses and allied electrical and civil infrastructure on gross cost contract basis. EVEY was to procure these buses from Olectra Greentech and which were to be delivered over a period of 24 months.

The value of the 5,150 electric buses supply was estimated at Rs 10,000 crore for Olectra and the maintenance of these buses was to be undertaken by the company itself during the contract period. In its annual report, the company said it was the world’s largest e-bus order from the MSRTC. As of 31st March, 2024, Olectra’s electric bus order book had reached 10,969 units and was expected to rise with additional tenders in the pipeline. 

Olectra Greentech shares closed at Rs 1,348.10 on Monday, up 4.23 per cent. The multibagger stock has rallied 2,252.71 per cent in the past five years. That said, it has lost one-fourth of its value in the past one year.

The minister on X posted that a revised schedule was given to Olectra for the supply of 1,000 buses by May 22, but not a single bus was delivered, raising doubts over the future delivery of the buses by the company. Therefore, it was said that the tender agreement with the company should be cancelled.

The minister said the company concerned has been inactive in supplying 5150 leased electric buses and the meeting directed that action should be taken to cancel the tender agreement signed by ST Corporation with this company. A meeting was held regarding the same at the headquarters of ST Corporation on various issues

The buses currently in operation with the ST Corporation should be rebuilt in stages and converted into Hirkani (semi-comfort) buses. It was also directed that those buses should be in green and white color as before.

The EV manufacturer had on Monday reported a 39 per cent year-on-year (YoY) rise in profit after tax (PAT) at Rs 20.69 crore for the March quarter compared with Rs 14.89 crore in the same quarter last year. Revenue for the company grew 55 per cent YoY to Rs 448.92 crore. It had recommended a final Dividend of Re 0.40 per equity share of Rs 4 each for the financial year 2024-25 subject to approval of shareholders of the company in the ensuring Annual General Meeting of the company.