Shares of Olectra Greentech, a prominent electric bus manufacturer, increased nearly 7% in intraday trading on Tuesday, October 8, reaching ₹1,663.45 each. This marked the end of a three-day decline. The surge in share market investment followed the company’s announcement of being the lowest bidder for a significant contract to supply 327 electric buses to the Himachal Road Transport Corporation (HRTC).
Electric bus contract boosts share price
The HRTC issued a tender for the procurement of 327 electric buses, comprising 297 units measuring 9 metres and 30 units of 12 metres, aiming to enhance green mobility across Himachal Pradesh. After a thorough evaluation of bids, both Olectra and Switch Mobility qualified. Olectra secured the contract with the most competitive bid, prompting expectations that HRTC will soon formalise the order.
However, the Bombay Stock Exchange (BSE) has sought clarification from Olectra regarding the news of the bid.
Rising demand for electric buses
As more state governments transition towards electric vehicles in public transportation, Olectra Greentech is actively engaging in bidding processes initiated by various State Transport Undertakings (STUs). The company’s order book for electric buses stood at an impressive 10,969 units as of March 31, 2024. With more tenders on the horizon, this number is expected to rise.
According to Olectra’s FY24 annual report, approximately 1,695 of its electric buses are currently operational on Indian roads, collectively travelling over 10 million kilometres monthly.
Government support for electric mobility
In September, the Union Cabinet approved the “PM-eBus Sewa-Payment Security Mechanism (PSM) scheme,” allocating ₹3,435.33 crore to aid the procurement and operation of electric buses by Public Transport Authorities (PTAs). Under this initiative, over 38,000 electric buses are anticipated to be deployed from FY 2024-25 to FY 2028-29, with support lasting up to 12 years post-deployment.
Currently, less than 10% of buses in India’s fleet are electric, with the majority operating on diesel or CNG.
Market potential and growth
The Indian electric bus market has shown remarkable growth, increasing by 75% in FY24, with 3,516 units sold compared to 2,006 in FY23. Olectra has played a crucial role in this surge, contributing significantly to the e-bus delivery.
The electric bus market generated USD 282.7 million in revenue in 2023, with projections indicating a strong CAGR of 18.2% from 2024 to 2030, potentially reaching USD 905.4 million by 2030, as per P&S Market Research.
By 2030, STUs are expected to need around 370,000 buses, necessitating significant infrastructure upgrades and the replacement of about 35,000 outdated diesel buses.
Olectra’s financial performance reflects this growth, with consolidated revenue from operations increasing by 45.37% YoY to ₹314 crore in Q1 FY25 and net profit rising to ₹24 crore, a 33% increase from the previous year.
Key takeaways
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