Olectra Greentech zooms 43% in 3 days post winning MSRTC Rs 10,000 cr order

Shares of Olectra Greentech hit a new high of Rs 1,408.85, as they rallied 14 per cent on the BSE in Monday’s intra-day trade amid heavy volumes. The stock of electric-bus manufacturer was quoting higher for the third straight day, zooming 43 per cent during the period after the company bagged contract worth Rs 10,000 crore from Maharashtra State Road Transport Corporation (MSRTC).

Olectra Greentech, on Friday, July 7, announced that consortium of Olectra Greentech and Evey Trans Private Limited has received a Letter of Intent (LOI) 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 shall procure these buses from Olectra and which shall be delivered over a period of 24 months. Maintenance of these buses shall also be undertaken by the Olectra during the contract period, the company said. EVEY is a wholly-owned subsidiary of promoters, MEIL Holdings Limited.

At 11:07 AM; Olectra was trading 12 per cent higher at Rs 1,383, as compared to 0.34 per cent rise in the S&P BSE Sensex. A combined 11.53 million shares representing 14 per cent of total equity of the company had changed hands on the NSE and BSE.

According to ICRA, the support from Government initiatives such as reduction of GST rate on e-buses, introduction of FAME I and FAME II scheme to promote electric mobility in India, etc also support the growth prospects. However, timely completion of its proposed capacity expansion in the e-bus division remains critical for timely execution of orders.

Olectra’s earnings to improve significantly with increase in scale of operations; despite moderation due to competition, Olectra’s operating margins are expected to remain healthy at 9-12 per cent in the near term, the rating agency said in rationale.

The 'Stable' outlook on the long-term rating considers ICRA’s belief that Olectra will witness a strong growth in revenues and earnings, driven by higher execution in the e-bus division, and that the company will continue to maintain healthy debt metrics despite the sizeable capex plans in the near term.