Goldman Sachs has set a price target of INR 160 apiece, implying an upside potential of over 48% from the previous close
The brokerage said it expects a 2.5X faster revenue growth and 5X faster volume growth for Ola Electric over a 3-year period as compared to its peers in the Indian EV 2W market
It expects Ola Electric to achieve EBITDA breakeven by FY27E, primarily driven by decrease in battery pack prices
International brokerage firm Goldman Sachs has initiated coverage on listed emobility major Ola Electric
with a “buy” rating on robust growth outlook, saying that the startup is set to benefit from long-term structural trends in India’s electric two-wheeler market.
Despite a degrowth in its bottomline and volatility in the stock price, the brokerage has set a price target of INR 160 apiece, implying an upside potential of over 48% from the previous close.
Shares of Ola Electric jumped over 8% to INR 116.4 apiece on the BSE during intraday trading today (September 17).
Goldman Sachs said it expects a 2.5X faster revenue growth and 5X faster volume growth for Ola Electric over a 3-year period as compared to its peers in the Indian EV 2W market.
The brokerage said it expects Ola Electric’s sales to jump more than 40% annually over FY24 to FY27E, led by increasing industry-wide EV penetration, market leadership position in the fast-growing electric 2W segment and continued higher number of new product launches, spanning multiple segments.
Ola Electric’s consolidated net loss widened 30% to INR 347 Cr in the June quarter of the financial year 2024-25 (Q1 FY25) from INR 267 Cr in the year-ago quarter. Operating revenue rose 32% to INR 1,644 Cr during the quarter under review from INR 1,243 Cr in Q1 FY24.
In contrast, Goldman Sachs expects TVS, Bajaj, and Hero to see an annualised revenue growth of 16%, 19% and 10%, respectively during the same period.
The brokerage further said that it expects Ola Electric to achieve EBITDA breakeven by FY27E, primarily driven by decrease in battery pack prices.
Analysts at Goldman Sachs pointed out that Ola Electric has the strongest product pipeline among its competitors with 14 planned launches as compared to 4 by Honda, 6 for Bajaj Auto, 8 for TVS Motor.
Ola Electric has been able to maintain its market leadership position supported by its value-for-proposition and lower running costs per km, the report said.
“OLAE’s Electric motorcycle portfolio roll out starting March quarter 2025 and entry into another new fast growing market (electric 3Ws in mid CY25 are catalysts,” for the buy rating, Goldman Sachs said.
However, it’s worth noting that Ola Electric’s total escooter registrations declined 34% month-on-month (MoM) to 27,517 units in August as against 41,712 units in July. Brokerage firm Jefferies recently pointed out that Ola Electric’s market share slipped to 39% in July and 33% in August, though it still leads the EV 2W segment.
This comes on the heels of reports that Ola Electric is gearing up to foray into the electric three-wheeler market to take on the likes of Euler Motors, Piaaggio, among others.
Ola Electric is developing an in-house electric three-wheeler and plans “to bring it to the market soon”, CEO and managing director Aggarwal told CNBC-TV18. However, he did not provide a specific timeline for the launch.
At Ola Sankalp 2024, Aggarwal unveiled Ola Electric’s Roadster series of e-bikes, which are expected to hit the roads as soon as next year.
Meanwhile, BofA Securities has also initiated coverage on Ola Electric with a “buy” rating at a price target of INR 145, which implies an upside potential of almost 35% from the stock’s last close.
The brokerage’s buy call on the stock came on the back of Ola Electric’s product commercialisation and distribution, technology, cost competitiveness, consolidated market structure, access to capital and battery cell.
