Shares of Olectra Greentech experienced a sharp decline on Tuesday, May 27, 2025, following the Maharashtra government's decision to cancel a significant electric bus order. The stock price plummeted by as much as 14% in pre-open trade before recovering slightly to close 5.7% lower at Rs 1,269.10 on the National Stock Exchange. This drastic market reaction stems from concerns about the company's ability to fulfill its contractual obligations and the potential financial ramifications of losing such a substantial deal.
The order in question, valued at approximately Rs 10,000 crore, was awarded in July 2023 to a consortium comprising Olectra Greentech and Evey Trans Private Limited by the Maharashtra State Road Transport Corporation (MSRTC). It involved the supply, operation, and maintenance of 5,150 electric buses over a 24-month period under a gross cost contract. Evey Trans, a subsidiary of Olectra Greentech, was responsible for operating and maintaining the buses under the lease agreement. The buses were to be procured from Olectra Greentech. This was touted as one of the world's largest electric bus orders.
Maharashtra's Transport Minister and MSRTC Chairman, Pratap Sarnaik, announced the cancellation, citing the company's failure to meet delivery deadlines. Sarnaik stated on social media platform X that the company had been inactive in supplying the buses. He further added that the company failed to deliver even a single bus by the extended deadline of May 22, despite being asked to deliver at least 1,000 buses by that time. "If the company cannot deliver on time, the contract must be terminated without delay," Sarnaik said.
The minister's announcement followed a meeting at the Maharashtra State Road Transport Corporation (MSRTC) headquarters. While Sarnaik did not directly name Olectra Greentech in his initial statement, reports have confirmed that his comments were directed at the electric vehicle manufacturer. As of now, Olectra Greentech has not issued an official statement addressing the order cancellation.
Despite the setback, Olectra Greentech posted strong Q4 earnings on Monday. The company's net profit rose 39% year-on-year to Rs 20.69 crore, while revenue climbed 55% to Rs 448.92 crore. The company also recommended a final dividend of Rs 0.40 per share for FY25, subject to shareholder approval. The company's EBITDA (earnings before interest, tax, depreciation, and amortisation) reached Rs 58.35 crores in the last quarter of the financial year 2024-25, a growth of 36% YoY compared with the previous fiscal year.
The cancellation of the Maharashtra government's order has raised concerns among investors about Olectra Greentech's ability to execute large-scale projects and meet its contractual obligations. The company's stock, which had delivered over 2,250% returns in the last five years, has lost about 25% of its value over the past year.
As of March 31, 2024, Olectra's electric bus order book stood at 10,969 units, with expectations for further growth. The recent order cancellation adds uncertainty. An analyst call is scheduled for May 28 to address earnings and ongoing concerns. The company now faces the challenge of restoring investor confidence after missing key delivery milestones in a landmark e-bus project.
