Much of the inventory market runs on storytelling. One of its favorite narratives is the expansion inventory – corporations anticipated to increase sooner than the typical enterprise. Such shares are bought at costs that look costly relative to present earnings, as a result of traders are paying not for what the corporate is, however what they consider it can turn into.
Ola Electric was bought on an analogous promise. It positioned itself as the corporate that may lead the transition from petrol scooters to electrical ones – not simply in India, however globally. While legacy producers have been seen as “incumbents” shifting cautiously, Ola positioned itself because the “disruptor” – typically drawing direct comparisons with Tesla to justify its premium pricing regardless of heavy losses.
Investors purchased this story. Or as Jeremy Grantham writes with Edward Chancellor in The Making of a Permabear: “Growth is pleasing, investors want to own it and are willing to pay up for it.”
Of course, the finance-industrial complicated, comprising of funding bankers who handle the preliminary public choices (IPOs), fund managers, stockbrokers, monetary influencers and the enterprise media, work extra time to promote the story as a result of there may be an incentive-caused bias. As Grantham and Chancellor write: “The commercial imperative of the investment business is to be a bull all the time.”
Indeed, the finance-industrial complicated talked up the Ola Electric IPO, which got here in early August 2024. For each 10 shares on provide, there was demand for 43 – regardless of the corporate having racked up losses of over Rs 4,000 crore between 2020-21 and 2023-24. Post itemizing, the inventory surged to an all-time closing excessive of Rs 146 inside days.
Along with retail traders, mutual funds piled in. This wasn’t shocking on condition that the finance-industrial complicated runs on a quiet understanding: you scratch my again, and I scratch yours. Anyone elevating primary questions concerning the firm’s losses or stating that legacy gamers wouldn’t sit round doing nothing was shortly dismissed as a non-believer “in the new world order”.
Nonetheless, as is usually the case with enterprise capital-backed, loss-making startups that listing on the inventory change, the doubters have been proper. Ola Electric by no means actually had a viable enterprise mannequin, and its half-baked product proved to be a dud. The firm continues to bleed. From October to December 2025, gross sales have been Rs 470 crore and losses Rs 487 crore – that means it misplaced greater than a rupee for each rupee earned.
So, that leaves us with three investing classes.
First, while you purchase an IPO of a loss-making firm, or purchase its shares within the open market, you don’t actually know whether or not their enterprise mannequin will work. Also, there’s a enormous promoter danger, which has turned out to be true in case of Ola Electric.
Second, as John Maynard Keynes writes in The General Theory of Employment, Interest and Money: “Life is not long enough; – human nature desires quick results, there is a peculiar zest in making money quickly.” But desirous to earn cash shortly doesn’t imply you’ll. Of course, traders who have been fortunate to get shares within the Ola IPO after which bought out shortly, did earn cash. But many traders have misplaced cash right here.
Third, as Grantham and Chancellor write, this isn’t the primary time that “equity investors have overpaid for excitement or sex appeal”. But each time traders try this, they find yourself shopping for a inventory at a really excessive worth. And as Grantham and Chancellor clarify: “If you buy something expensive, it must return less.” Of course, Ola Electric is an excessive case, however the broader Indian inventory market and it’s lack of returns for some time is an efficient basic instance of this phenomenon.
In the tip, markets took an excellent story, wrapped it in PowerPoint/Canva slides, sprinkled it with phrases like disruption, ecosystem and world ambition, and bought it at a premium. Retail traders and mutual funds queued as much as purchase. But the promised future forgot to indicate up.
It takes a particular type of genius to promote a product for one rupee whereas spending two to make it – and nonetheless persuade the market that it represents the following industrial revolution.
The finance-industrial complicated might have moved on to scouting the following unicorn grazing within the meadows of hype. For retail traders, nonetheless, it has became what Indian markets sometimes concentrate on: paisa fek, tamasha dekh. Only this time, the tamasha was costly, with Jay, Ajay and Vijay left holding a digital key to a scooter that received’t begin and a portfolio that received’t cease bleeding.
Vivek Kaul is an financial commentator and a author
