Shares of Ola Electric Mobility surged 6 per cent to a day’s high of Rs 114.30 on BSE today after global brokerage firms Goldman Sachs and Bank of America (BofA) initiated coverage on the stock with target prices of Rs 160 and Rs 145, respectively. The price targets suggested up to 50 per cent potential upside on the counter. The ‘Buy’ ratings came a week after Ambit Capital initiated coverage on the stock with a ‘Sell’ call, saying opportunities are huge but rising competition may drive Ola’s market share lower.
Ola Electric can achieve Ebitda breakeven in FY27, Goldman Sachs reportedly said. The brokerage expects a revenue growth in excess of 40 per cent compounded annually over FY24-30, implying a free cash flow breakeven in FY30. Goldman Sachs is expecting Ola Electric to achieve 11.9 per cent Ebitda margin and 27 per cent ROIC by FY30. The company is positively levered to long-term structural trends in India’s electric two-wheeler market, Goldman Sachs said as it suggested a target price of Rs 160 on the counter, ET NOW reported.
Thee stock closed at Rs 107 on Monday. The Goldman Sachs’ target price suggests 49.53 per cent upside potential over this price.
On the other hand, BofA Securities has reportedly suggested a price target of Rs 145 on the stock, saying technology and cost leadership enabled Ola’s right to win. In the case of battery making, it said there are a lot of naysayers but it is worth a bet. This target suggests a potential 36 per cent upside for Ola Electric stock over Monday’s closing price.
Foreign brokerage HSBC, which last month initiated coverage on Ola Electric Mobility Ltd with a ‘Buy’ rating, said that the recent market share loss at Ola Electric is worrisome, as it suspects that the development could be due to the ramp-up of low cost variants from competition. While the brokerage retained its ‘Buy’ rating and a target price of Rs 140 on the stock, there could be 15-20 per cent downside risk to volume estimates for FY25 and FY26 if such a market trend sustains, it said.
Ambit Capital said it expects Ola Electric’s market share to decline to 25 per cent by FY31 from 42.4 per cent in FY25 as new players such as Honda and Suzuki enter, other e-2W OEMs expand their product portfolio and reach and its incentives gets fully utilised.
“This coupled with the risk of changes in government policies, heightened competitive intensity and thin profitability in a capex-intensive business model pose risks for OLA Electric. Initiate with SELL and target price of Rs 99.60,” Ambit Capital said.
Ola Electric shares were listed in August and have experienced a roller-coaster ride. After a subdued debut at the upper band price of Rs 76, the shares doubled to an all-time high of Rs 157.53 within seven days. However, amid profit booking, the stock faced significant pressure, falling by 22 per cent over five consecutive trading sessions.
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