Olectra Greentech Shares Skyrocket Over 140% in 2023; Should you buy the stock?

Olectra Greentech has experienced a remarkable year, witnessing its shares surge by over 140% in 2023. Notable milestones include breaking the ₹1,000 mark in June and reaching a historic peak of ₹1,465 per share the following month.

As part of the MEIL Group, Olectra Greentech is a small-cap stock with a market cap of ₹9,818 crore. Recognized as India’s largest pure electric bus manufacturer, the company operates manufacturing facilities in Hyderabad and holds the distinction of being the country’s first-ever electric bus manufacturer, producing and deploying all variants of electric buses in India.

A recent report from Geojit Financial Services emphasizes Olectra Greentech’s strategic positioning to capitalize on the increasing adoption of electric vehicles (EVs). The brokerage points to the company’s significant orders from various State Transport Undertakings (STUs) in India during the last financial year. These include substantial orders from Telangana State Road Transport Corporation (TSTRC), Brihanmumbai Electric Supply and Transport Undertaking (BEST), and Maharashtra State Corporation (MSRTC), showcasing the company’s stronghold in the electric bus segment.

Additionally, the report highlights Olectra Greentech’s participation in the upcoming PM e-Bus program, which is expected to open tenders for 10,000 buses next month, as announced by the Government of India. With a current market share of 27% in this segment, the company stands to benefit from the burgeoning demand for electric buses.

The brokerage notes that Olectra Greentech currently holds an impressive order book of 9,000 electric buses to be delivered in the next 12–24 months. To meet this demand, the company is diligently working on its new Greenfield EV manufacturing facility in Telangana, with an initial capacity of 5,000 vehicles per year, extendable to 10,000 vehicles per year. The facility is expected to be operational by Q4FY24.

With a joint venture with BYD China, the largest EV manufacturer globally, Olectra Greentech is expanding its product line in the e-mobility sector, including 3-wheeler electric autos and electric truck tippers. The company’s partnership with Reliance on the Hydrogen Bus project is also highlighted, showcasing its commitment to cutting-edge transportation systems.

Considering the strong order book, capacity expansion, and scalability of multiple powertrains, Geojit recommends Olectra Greentech as an ‘Accumulate,’ with a target price of ₹1,351 apiece. The brokerage factors in strong earnings growth while acknowledging that delays could pose near-term risks to valuation.

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