Moody’s Downgrades Ola’s Rating Citing Weak Operating Performance

Credit ratings agency Moody’s has downgraded Ola parent ANI Technologies’ corporate family rating to Caa1 from B3 and the rating of guaranteed senior secured term loan borrowed by OLA Netherlands B.V to Caa1 from B3 earlier.

The company cited weak operating performance and risks of covenant breach as the reason for the downgrade of the ratings of the ride-hailing startup. 

“The downgrade to Caa1 and negative outlook reflects the ongoing weakness in Ola’s operating performance that is eroding liquidity and raising the risk of a covenant breach in the coming months”, said Sweta Patodia, assistant vice president and analyst at Moody’s Ratings.

Notably, Moody’s gave a B3 rating in 2021 for the loan taken by OLA Netherlands and guaranteed by ANI Technologies.

In the latest note, the credit ratings agency said that the unicorn will have to maintain cash equivalent to 40% of the outstanding loan of $65 Mn due December 2026, which is $26 Mn, to comply with the covenant. A covenant breach will constitute an event of default and accelerate the repayment of the $65 Mn loan.

“Sustained operating weakness has resulted in higher than expected cash burn during the six months ended September 30, 2025. This has reduced cash substantially from $90 Mn at March 2025 and lowered the headroom under the term loan covenant,” Moody’s said.

Citing the intense competition in the Indian ride-hailing space, Moody’s said ANI Technologies is expected to continue to burn cash over the next 12 months and will have to rely on external funding sources to refinance the loan.

Notably, Ola, which once was the key competitor to Uber in India, has been losing market share to Rapido. In August, Uber CEO Dara Khosrowshahi said that Rapido has emerged as the biggest competitor for the company in India, overtaking Ola.

Moody’s also said that ANI Technologies has the option of going for an IPO or selling its 3.64% stake in founder Bhavish Aggarwal’s listed EV company Ola Electric to meet its cash requirements. However, these options are subject to market risks and execution.

“Absent any committed credit facilities or alternative refinancing arrangements, the probability of debt restructuring remains high over the next 12 months,” the note added.

It is pertinent to mention that Ola, also known as Ola Cabs, was rebranded to Ola Consumer in August last year. In November 2024, ANI Technologies dropped the word “private” from its name as it began preparations for its IPO. However, there has been no further movement on the public listing plans so far.

Founded in 2010 by Aggarwal, Ola started as a ride-hailing startup. However, it has added new services to its offerings over the past few years. Now, Ola Consumer also offers credit disbursement via Ola Credit, UPI payments via Ola Pay, and an AI shopping copilot to personalise shopping experience. 

The startup has raised a total funding of over $4 Bn to date and counts marquee names like SoftBank, Peak XV Partners, Tiger Global, Z47, Temasek, among others, as its investors.