Ola Electric Q1 Results Review: Street Divided Despite Profit, Margin Improvement — Here's Why

Ola Electric Mobility's Q1 performance has garnered varied reactions from leading brokerage firms, with a common theme of cautious optimism. While the company has shown significant improvement in gross margins and profitability, concerns about volume growth and market share persist.

Goldman Sachs has raised its 12-month price target for Ola Electric to Rs 63, citing sequential improvement in volume and gross margin expectations. "We acknowledge management's efforts in trying to pivot the business towards positive Ebitda and FCF breakeven," Goldman Sachs noted.

Goldman Sachs also pointed out the company's strategic moves to mitigate disruptions from rare earth shortages and the development of an in-house ABS kit.

The brokerage also noted that "Ola Electric expects relatively low disruption from rare earth shortages and could gain market share in the near term as a result."

BofA Securities reiterated its "Underperform" rating with a price objective of Rs 45. "Ola's gross margin delivery of 25.8% in Q1 took markets by surprise," BofA Securities stated. The firm attributed the margin expansion to the Gen 3 platform transition, which reduced BOM costs by over 15%.

About the results, the brokerage also highlighted that, "This is a welcome relief coming after a period of regulatory & operational setbacks for the company over the last 6-9 months."

Despite the positive margin performance, BofA Securities expressed concerns about market share loss and the slowing EV adoption curve. "Market share loss needs to stop, which has come down from 45-50% in Q1FY25 to -20%," the firm emphasised.

Kotak Institutional Equities maintained its "Sell" rating with a fair value of Rs30. "Ola Electric's 1QFY26 losses were lower than our estimates, driven by better-than-expected volume offtake and gross margin," Kotak noted.

The brokerage also noted that the company has improved its profitability "significantly." Volume offtake remains below expectations given muted industry growth and increased competitive intensity, which remains an area of concern.

The firm highlighted the company's challenges in achieving its volume targets, projecting sales of 310k units for FY2026E. "Volume offtake remains below expectations given muted industry growth and increased competitive intensity," Kotak Institutional Equities remarked.