- Citi downgraded Ola Electric from Buy to Sell with target price cut to Rs 27
- Ola Electric's sales dropped from Rs 1,644 crore to Rs 470 crore in FY26 Q3
- Slower EV penetration and GST cuts have hurt Ola's market share and sales growth
There could be tough times ahead for Ola Electric. That is according to Citi, which has sharply downgraded the stock, citing persistent headwinds while cutting the target price by half. It is a complete change of outlook by Citi, which is no longer bullish on the stock.
In its latest note, Citi has downgraded Ola Electric from 'Buy' to 'Sell' while trimmign target price from Rs 55 to Rs 27. From suggesting an upside of 90% from Monday's closing price of Rs 28.83, Citi now believes the stock could provide a downside of up to 6%.
Why Is Citi Bearish On Ola Electric?
Citi's cautious commentary on Ola Electric comes on the back of persistent headwind, especially in terms of the company's volume growth.
The brokerage firm notes that the electric vehicle (EV) penetration in the Indian two-wheeler sector has been more sluggish than previously expected, which has put downside pressure on Ola Electric's sales, which have plummeted from Rs 1,644 crore in July 2024 to Rs 470 crore in the December quarter of FY26.
Citi explains that the recent GST cuts have further slowed electrification, with Ola losing significant market share due to service issues, high competition and adverse customer perception.
Not to mention, Ola Electric's December quarter results were below estimates due to negative operating leverage. However, the firm acknowledges that the impressive gross margin trends and better operating leverage could boost Ola's Ebitda.
But even as the management tries to improve product and service quality, it could take some time to fructify. Until then, the customer perception around Ola Electric remains a key weakness for the company.
Moreover, the large negative cash flow could result in investor concerns on balance sheet-net debt, further adding to Ola Electric's woes.
ALSO READ: Tata Motors CV Vs Ashok Leyland: HSBC Picks The Cheaper Stock And Hikes Target Price
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
