Mumbai: Shares of electric two-wheeler maker Ola Electric Mobility declined 4.5% on Friday after the company's weak fourth quarter results, and a loss in market share disappointed investors.
Kotak Institutional Equities downgraded the stock to 'Sell' and cut its price target to ₹30 from ₹50 earlier, implying a downside of 41% over Friday's closing price of ₹50.85.
"The past couple of quarters' performance has been marred by a weaker volume print and rising warranty provisions, which weighed on profitability," said the brokerage.
"With a deteriorating balance sheet, the company needs to scale up its volumes to reduce cash outflow."
Ola's losses widened from ₹564 crore in the December quarter to ₹870 crore in March, while revenue from operations fell by 41.5% in this period.
"Ola Electric's fourth quarter results reflect a sharp deterioration in its key financial metrics, underscoring deep-rooted operational and strategic concerns," said Sagar Shetty, research analyst, StoxBox. "These challenges are further exacerbated by intensifying competition in the EV two-wheeler space, as legacy players aggressively scale up and consolidate market share."
In May, TVS and Bajaj Auto have already crossed Ola in terms of electric two-wheeler sales, as per Vahan data.
Shetty said the near-term outlook for the stock is clouded because "consumer confidence in the company appears to be undermined by ongoing concerns surrounding the company's sales reporting practices and consumer services issues".
Ola Electric got listed in August last year. The IPO was priced at ₹76. The stock hit an all-time high of ₹157.4 soon after the listing.
Brokerage Goldman Sachs remains bullish on the stock, with a 'Buy' rating, while cutting its price target from ₹75 to ₹70, implying 38% upside from here.
"We view the current valuation levels as attractive, given the pure-play EV exposure and high growth potential ahead," said the Goldman note.
The brokerage said catalysts for the stock include electric motorcycle launches, electric three-wheeler launches, improvement in cell production yields and PLI (production-linked incentive) certification on balance products.
Shetty has cautioned investors against buying the stock for now and to wait for clear, sustained improvements in the company's financial performance in upcoming quarters.
Kotak Institutional Equities downgraded the stock to 'Sell' and cut its price target to ₹30 from ₹50 earlier, implying a downside of 41% over Friday's closing price of ₹50.85.
"The past couple of quarters' performance has been marred by a weaker volume print and rising warranty provisions, which weighed on profitability," said the brokerage.
"With a deteriorating balance sheet, the company needs to scale up its volumes to reduce cash outflow."
Ola's losses widened from ₹564 crore in the December quarter to ₹870 crore in March, while revenue from operations fell by 41.5% in this period.
"Ola Electric's fourth quarter results reflect a sharp deterioration in its key financial metrics, underscoring deep-rooted operational and strategic concerns," said Sagar Shetty, research analyst, StoxBox. "These challenges are further exacerbated by intensifying competition in the EV two-wheeler space, as legacy players aggressively scale up and consolidate market share."
In May, TVS and Bajaj Auto have already crossed Ola in terms of electric two-wheeler sales, as per Vahan data.
Shetty said the near-term outlook for the stock is clouded because "consumer confidence in the company appears to be undermined by ongoing concerns surrounding the company's sales reporting practices and consumer services issues".
Ola Electric got listed in August last year. The IPO was priced at ₹76. The stock hit an all-time high of ₹157.4 soon after the listing.
Brokerage Goldman Sachs remains bullish on the stock, with a 'Buy' rating, while cutting its price target from ₹75 to ₹70, implying 38% upside from here.
"We view the current valuation levels as attractive, given the pure-play EV exposure and high growth potential ahead," said the Goldman note.
The brokerage said catalysts for the stock include electric motorcycle launches, electric three-wheeler launches, improvement in cell production yields and PLI (production-linked incentive) certification on balance products.
Shetty has cautioned investors against buying the stock for now and to wait for clear, sustained improvements in the company's financial performance in upcoming quarters.
You may also like
BJP MP Praveen Khandelwal Slams AAP's Sanjay Singh For 'One Nation, One Husband' Remark, Defends Operation Sindoor Campaign
Coastguard makes desperate plea as migrants on boats make them too busy for rescues
UEFA to make Champions League rule change next season after Arsenal complaints
'Not Just One Community's Leader': LJP Hints Chirag Paswan May Contest Bihar Assembly Polls From General Seat; Party Pushes For Broader Representation
BJP govt in Assam concerned for power, money, land, syndicate: Gaurav Gogoi
