Shares of Ola Electric Mobility Ltd. fell over 6% on Friday with stock trading at Rs 30.80 apiece after Goldman Sachs downgraded to sell from neutral and cut its 12-month target price to Rs 23 from Rs 39.28 noting concerns over cash flow, funding requirements and market share. The stock opened 2.66% lower at Rs 31.09 and extended losses to touch Rs 30.75 apiece at 9:31 am.
The brokerage said it sees better return potential elsewhere in its two-wheeler coverage, which offers an average upside of 20%. Goldman Sachs said Ola Electric's path to sustainable free cash flow generation has become less clear, given relatively high interest costs and capital expenditure requirements across its battery cell and electric two-wheeler businesses.
These requirements come during what the brokerage expects to be a more extended period of operating losses at current market share levels, adding to its caution on the stock.
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To cover current capital expenditure and interest servicing requirements, Ola Electric would need revenue in FY28 to FY30 to reach between 3.6 times and 7.1 times its FY26 level, according to Goldman Sachs. That compares with a 55% decline in revenue in FY26 against FY24, the brokerage said, highlighting the scale of growth required to meet those needs.
Goldman Sachs also flagged possible operating challenges in the battery cell business following the recent departure of its head. The brokerage reduced its FY27 to FY29 revenue estimates by up to 10% to reflect a more challenging market share environment for Ola Electric compared with its two-wheeler peers.
Goldman Sachs said it could turn more constructive if a shift towards dealer-led sales and servicing revives the electric two-wheeler business and improves weak brand sentiment.
It would also look for a positive consolidated operating Ebitda margin, alongside faster customer additions and profitability in the cell business. These are the conditions the brokerage identified for a more favourable view of the company.
Ola Electric Share Price Today
Ola Electric Share Price Today
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The scrip fell as much as 6.51% to Rs 29.86 apiece on Friday at 9:41 a.m. This compares to a 0.05% rise in the NSE Nifty 50 Index.
It has fallen 43.08% in the last 12 months and 16.42% year-to-date. Total traded volume so far in the day stood at 83.35 times its 30-day average. The relative strength index was at 36.11.
Out of eight analysts tracking the company, one maintains a "hold", and seven maintain a "sell" rating, according to Bloomberg data. The average 12-month consensus price target of Rs 26.23 implies a downside of 14.9%.
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