Ola Electric Shares Jump Over 7% on Bullish Global Brokerage Ratings

Ola Electric Mobility's shares have been under the spotlight in Tuesday’s trading session, driven by favorable buy ratings from two influential global brokerages, Goldman Sachs and BofA Securities. The stock price jumped by over 7%, following these optimistic evaluations, drawing significant investor attention.

Positive Outlook from Global Brokerages

Goldman Sachs set a bullish target price of ₹160 for Ola Electric, representing a 49.53% potential upside from Monday’s closing price. The brokerage projects impressive growth for the company, expecting it to reach EBITDA breakeven by FY27 and free cash flow (FCF) breakeven by FY30. Additionally, Goldman Sachs anticipates a strong compounded annual revenue growth of over 40% from FY24 to FY30, with an EBITDA margin of 11.9% and a return on invested capital (ROIC) of 27% by FY30.

In its analysis, Goldman Sachs noted, "Ola Electric is well-positioned to benefit from long-term trends in India’s electric two-wheeler market, despite concerns about its in-house battery cell production."

Similarly, BofA Securities echoed a positive sentiment, setting a target price of ₹145, indicating a potential 36% upside. The brokerage emphasized Ola Electric’s technological leadership and cost efficiency, which it believes will enable the company to maintain its competitive edge in the electric two-wheeler market.

BofA further pointed out that Ola holds a commanding 40% market share in the electric two-wheeler space as of 2024. They forecast that the adoption rate of electric two-wheelers in India, currently at 6.5%, will rise to 25% by FY30, positioning Ola Electric for continued success.

Cautious Views from Ambit Capital and HSBC

While the overall outlook remains positive, not all brokerages share the same level of optimism. Ambit Capital recently initiated coverage on Ola Electric with a 'Sell' rating and a target price of ₹99.60, citing rising competition and potential risks related to government policies.

Ambit warned that the entry of established players like Honda and Suzuki into the electric two-wheeler market, along with existing manufacturers expanding their product lines, could reduce Ola Electric's market share from 42.4% in FY25 to 25% by FY31. Furthermore, the company’s capital-intensive business model and reliance on government incentives were flagged as additional concerns.

HSBC also maintained a ‘Buy’ rating but expressed reservations about the company’s recent market share declines. The brokerage identified the ramp-up of low-cost models by competitors as a key factor and warned of a 15-20% downside risk to Ola Electric’s volume estimates for FY25 and FY26 if these trends persist.

Market Outlook and Future Prospects

Despite the varying perspectives from brokerages, Ola Electric’s leadership position in India’s growing electric two-wheeler sector remains strong. As the company continues to work towards its financial breakeven targets, the next few years will be critical in determining whether Ola can sustain its market leadership and fulfill its growth projections.

The evolving competitive landscape, coupled with the increasing adoption of electric vehicles in India, will play a crucial role in shaping Ola Electric’s future in the highly competitive two-wheeler market.

In conclusion, Ola Electric’s stock surge following positive brokerage reviews reflects strong market confidence in the company’s long-term growth prospects. However, with rising competition and potential policy shifts, Ola will need to navigate these challenges to maintain its dominant position in the Indian electric two-wheeler space.