Ola Electric share price opened more than 5% lower on Tuesday following a show cause notice received by the company from the central government on Monday due to thousands of complaints filed by customers for poor quality of scooters.
However, the stock recovered later, trading 0.37% higher at Rs 90.95 per share at 9:50 am.
The stock fell more than 9% on Monday, continuing a downward trend that has seen the stock decline nearly 11% over the past week and over 17% in the past month. On Monday the stock's price was down from its listing day closing price of Rs 91.2 on August 9, marking a lifetime low.
According to sources who spoke to NDTV Profit, the notice targets billionaire founder Bhavish Aggarwal and his company for allegedly breaching the Consumer Protection Act, following over 10,000 complaints logged with the National Consumer Helpline in the past year.
Ola Electric acknowledged receipt of the notice in an exchange filing. The filing, signed by Chief Financial Officer Harish Abichandani, stated, “The show cause notice has been issued by the Central Consumer Protection Authority for alleged violations of consumer rights, misleading advertising, and unfair trade practices.” The company plans to respond to the notice before the Central Consumer Protection Authority.
The filing further noted that the show cause notice currently has no impact on the company's financial, operational, or other activities, and it does not impose any penalties or financial fines.
The scrip fell as much as 5% to Rs 86 apiece at market open. It later recovered some losses to trade 2.38% higher at Rs 92.98 apiece, as of 09:24 a.m. This compares to a 0.07% decline in the NSE Nifty 50 index.
It has risen 1.95% since listing. The relative strength index was at 38.
Out of five analysts tracking the company, four maintain a 'buy' rating, and one suggests 'sell,' according to Bloomberg data. The average 12-month consensus price target implies an downside/upside of 63.6%.
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