Ola Electric Mobility Ltd.’s June-quarter earnings reinforced brokerages’ cautious stance as weak volumes, lower average selling prices and margin pressure continued to weigh on the electric two-wheeler maker. Kotak and Citi retained their ‘Sell’ ratings, while Goldman Sachs maintained ‘Neutral’, with analysts flagging volume scale, cash burn and intensifying competition as key concerns.
Brokerages said the company’s cost-control measures and reversal of a provision related to battery PLI targets provided some support, but were not enough to offset weaker operating performance. Kotak also warned that continued weak volumes could force Ola Electric to raise additional capital, while Citi said the impact of the shift to a dealership-led model remains uncertain.
The company reported a sharp decline in revenue and continued to post an EBITDA and net loss, while free cash flow remained negative for the ninth consecutive quarter.
Ola Electric Q1 Highlights (Consolidated, YoY)
- Revenue fell 45% to Rs. 455 crore from Rs. 828 crore.
- EBITDA loss narrowed to Rs. 165 crore from a loss of Rs. 237 crore.
- Net loss narrowed to Rs. 336 crore from a loss of Rs. 428 crore.
- Other income declined to Rs. 29 crore from Rs. 68 crore.
Gross margin declined 816 basis points sequentially to 30.3%. Management said commodity cost pressures are likely to keep margins range-bound for another one to two quarters.
Average selling price declined to Rs. 1.14 lakh from Rs. 1.31 lakh in the previous quarter. Management attributed the decline to product mix and expects ASPs to gradually settle around Rs. 1.30 lakh.
Free cash flow remained negative at Rs. 350 crore, marking the ninth consecutive quarter of negative consolidated free cash flow. The near-term business remains heavily dependent on the automotive segment, with cell-side revenue contribution not expected until Q3 or Q4.
Ola Electric’s market share also declined to 6.9% in July from 8.3% in Q1 FY27 and 5% in Q4 FY26, according to the company data provided.
In the energy business, Ola Electric reversed a Rs. 57 crore provision made earlier for missing battery PLI targets. The company said it remains confident of securing approval from the Ministry of Heavy Industries. It also plans to launch Mahashakti, the next phase of its battery storage business, on August 15.
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Here’s what brokerages are saying after Ola Electric announced Q1 results:
Kotak
- Maintained ‘Sell’; Target Price At Rs. 20
- Volume scale remains the critical hurdle.
- Q1 adjusted EBITDA margin was below expectations due to lower ASPs.
- Continued free cash flow outflow remains another challenge despite the QIP.
- Says Ola Electric could need to raise capital if the current volume trajectory does not improve.
Citi
- Maintained ‘Sell’; Target Price At Rs. 26
- Weak volumes and lower gross margin offset the benefits of cost control and reversal of the PLI penalty provision.
- Volumes remain sluggish and ASPs weak.
- Competition in the electric two-wheeler market is escalating.
- Positive impact from the shift to a dealership-based model remains uncertain at this stage.
- Sees Ola Electric’s operating performance as comparatively weaker.
Goldman Sachs
- Maintained ‘Neutral’; Target Price Raised To Rs. 40 From Rs. 38.90
- Q1 revenue declined 45% year on year, while EBITDA loss stood at Rs. 165 crore.
- Volumes recovered to around 40,000 units.
- Cash burn remains a concern, with free cash flow at negative Rs. 350 crore.
- Continues to remain cautious given weak operating performance and cash-flow pressure.
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