Ola Electric Mobility Ltd. announced its June quarter (Q1) results, revealing a reduced net loss alongside a significant drop in year-on-year revenue. The electric two-wheeler manufacturer posted a net loss of Rs 336 crore for Q1, an improvement from the Rs 426 crore loss recorded in the same period last year.
Despite the narrowing loss, the company's revenue saw a substantial decline, falling 45% year-on-year to Rs 455 crore, down from Rs 828 crore a year earlier. However, on a quarter-on-quarter basis, auto revenue from operations increased by 72%, with gross profit improving to approximately Rs 139 crore. Ola Electric maintained a healthy auto gross margin of 30.5% during a challenging commodity environment.
Orders and Deliveries Show Sequential Growth
In a positive sign for operational momentum, Ola reported a significant sequential increase in orders and deliveries. Orders surged to 44,071 units in Q1, up from 22,522 units in the previous quarter (Q4). Deliveries also rose, reaching 39,192 units in Q1 compared to 20,256 units in Q4. The company's electric two-wheeler market share expanded to 8.3% in Q1, from 5% in Q4.
Analysts Offer Mixed Views on Ola Electric Stock
Following the Q1 results, brokerage firms have offered differing perspectives on Ola Electric's stock. Goldman Sachs initiated coverage with a 'Neutral' rating and set a target price of Rs 40, citing concerns over the company's cash burn despite the improved performance metrics.
Conversely, Emkay Global reiterated its 'Sell' recommendation, assigning a target price of Rs 30. Emkay described Ola's Q1 results as mixed, expressing caution regarding the sustainability of the recovery. The brokerage highlighted intensifying competition from established players like TVS, Bajaj, and Hero MotoCorp (HMCL), which are ramping up capacities. Emkay also noted that Ather Energy's AURIC plant coming online in Q3 is expected to further intensify market rivalry, making Ola's efforts to improve execution and cut costs a potentially difficult and prolonged process.
The broader market sentiment, as reflected by Bloomberg consensus, indicates a target price of Rs 31.25, implying a 24% potential downside for the stock. This consensus includes six 'Sell' calls and two 'Hold' recommendations.