Global investment bank Goldman Sachs has lowered its rating for Ola Electric Mobility Ltd. from 'Neutral' to 'Sell', significantly cutting its target price for the electric vehicle manufacturer. The revised target price stands at Rs 23 per share, down from Rs 39.28, implying a potential downside of 28% from the stock's recent closing price of Rs 31.94.
The downgrade stems from concerns over Ola Electric's challenging trajectory towards achieving positive free cash flow. Goldman Sachs highlights high interest costs, substantial capital expenditure requirements, and prolonged operating losses as key factors impeding the company's financial health.
Analysts See Challenges Ahead for Ola Electric
With this latest move, Ola Electric now faces a consensus of seven 'Sell' recommendations from analysts, alongside one 'Hold' and no 'Buy' calls. The 12-month Bloomberg consensus target price is Rs 26.23, suggesting a potential downside of 17.9%.
Other financial institutions have also expressed caution. Earlier this month, HSBC assigned a 'Reduce' rating with a target price of Rs 23.57. Ambit Capital holds a 'Sell' rating with a target of Rs 28.48, while Investec maintains a 'Hold' rating and a target price of Rs 34.37.
Revenue Estimates Cut Amid Market Share Woes
Goldman Sachs has reduced its revenue estimates for Ola Electric for fiscal years 2027 through 2029 by up to 10%. This adjustment reflects the intensifying competition and a challenging market-share environment for Ola Electric compared to its two-wheeler peers.
The brokerage firm further noted that Ola Electric would need to scale its topline by 3.6 to 7.1 times over its FY26 levels by FY28-FY30 merely to cover its current capital expenditure and interest servicing obligations. This starkly contrasts with an anticipated 55% decline in topline revenue in FY26 compared to FY24.
Battery Business Faces Operational Headwinds
Adding to the concerns, Goldman Sachs also flagged potential operational challenges within Ola Electric's battery cell business following the recent departure of its business head. The firm indicated that its stance could become more constructive if Ola Electric implements strategic changes, such as shifting to a dealer-led sales and servicing model, improving its brand sentiment, achieving positive consolidated operating EBITDA margins, and accelerating customer acquisitions and profitability in its cell business.