Olectra Greentech, a prominent manufacturer of electric buses, has recently witnessed a significant surge in its share prices, rising nearly 7% in intraday trading on October 8. The shares reached ₹1663.45 each, marking a break from a three-day decline. This upward trend can be attributed to Olectra’s selection as the lowest bidder for a substantial contract to deliver 327 electric buses to the Himachal Road Transport Corporation (HRTC), as reported by ANI.
Contract Win for Electric Buses
The HRTC initiated this bidding process as part of its efforts to enhance green mobility within Himachal Pradesh. The tender called for 327 electric buses, which includes a mix of 297 units of 9 meters and 30 units of 12 meters for outright purchase. After rigorous evaluation, both Olectra and Switch Mobility met the necessary qualifications, with Olectra providing the most competitive bid. It is anticipated that HRTC will soon finalize the order.
Stock Exchange Inquiry
In the wake of the bid award, the Bombay Stock Exchange (BSE) has requested clarification from Olectra regarding the reported developments, which reflects the heightened interest and scrutiny surrounding the company’s operations.
Driving Green Initiatives
Amid growing concerns over environmental sustainability, Olectra Greentech is strategically positioning itself to capitalize on the increasing adoption of electric vehicles. The company has been actively engaged in bidding processes initiated by various State Transport Undertakings (STUs), aiming to replace outdated diesel buses with cleaner electric alternatives.
Robust Order Book
As of March 31, 2024, Olectra’s order book for electric buses stands impressively at 10,969 units, indicating strong demand and more opportunities for growth on the horizon. By the end of the fiscal year, approximately 1,695 of Olectra’s electric buses were operational on Indian roads, collectively covering over 10 million kilometers monthly, showcasing the company’s substantial impact on the public transportation landscape.
Government Support for E-Buses
In September, the Union Cabinet’s approval of the “PM-eBus Sewa-Payment Security Mechanism (PSM) scheme” with an investment of ₹3,435.33 crore is a crucial move to bolster the procurement and operation of electric buses by Public Transport Authorities (PTAs). This initiative is expected to facilitate the deployment of over 38,000 electric buses in the period from FY 2024-25 to FY 2028-29, addressing the long-standing reliance on diesel and CNG buses.
Market Growth Forecast
The Indian electric bus market has demonstrated impressive growth, with a remarkable 75% increase in sales in FY24, totaling 3,516 units sold, compared to 2,006 units in FY23. This growth trajectory positions Olectra as a significant contributor to the expanding market, indicating optimism for a continuously evolving transportation landscape.
Financial Performance
Olectra Greentech has also reported solid financials, with consolidated revenue from operations experiencing a year-on-year growth of 45.37%, reaching ₹314 crore in Q1 FY25. The net profit after tax saw a substantial increase, climbing to ₹24 crore from ₹18 crore in the same quarter of the previous year, highlighting the company’s robust operational growth amidst rising demand for electric buses.
Future Outlook
Looking ahead, estimates suggest that State Transport Undertakings will require about 370,000 new buses by 2030, necessitating significant infrastructure upgrades. The transition from conventional diesel buses to modern electric options is poised to support a cleaner aquatic environment, aligning with global sustainability goals.
Conclusion
As electric bus production and deployment continue to accelerate, Olectra Greentech is strategically well-positioned to benefit from the ongoing growth in this sector. The combination of governmental support, increasing market demand, and the company’s expanding order book underscores a promising future for Olectra as it plays a pivotal role in transforming public transportation in India.
Disclaimer: The views and recommendations expressed in this article are those of individual analysts. They do not represent the views of this publication. Investors are advised to consult with certified experts before making any investment decisions.
