Ola Electric rallies for 7th straight day; zooms 107% against issue price

Ola Electric share price: While the long-term potential of Ola Electric might be appealing, the current valuation appears to be quite speculative, analyst said

Ola share price news target: The upward movement in Ola Electric Mobility share price continued on the bourses on Tuesday. The share price of the electric vehicles' (EV) manufacturer hit a new high of Rs 157.53 on the BSE in the intra-day trade today and has more-than-doubled against its issue price in just seven trading days.

Ola Electric share price has zoomed 107 per cent over its issue price of Rs 76 per share. The company made a stock market debut on August 9, 2024.

At 09:28 AM, Ola Electric share was trading 3 per cent higher at Rs 150.70 on the BSE. In comparison, the BSE Sensex was up 0.17 per cent at 80,560.

Ola Electric is a leading EV manufacturer in India, specialising in the vertical integration of technology and manufacturing for EVs and their components, including battery cells.

According to Ola Electric's Red Herring Prospectus (RHP), the stock has a free-float of around 17 per cent, whereas 82.74 per cent outstanding is locked-in. Analysts believe the stock's fundamentals remain under the scanner as the company is a loss-making entity with expensive valuations.

"While the long-term potential of Ola Electric, given the EV market's favorable outlook, might be appealing, the current valuation appears to be quite speculative. Investors should be cautious, especially given the company's ongoing losses and the high volatility in its stock price. For new investors, it may be wise to wait for a more stable entry point or consider the stock as a long-term play with a high risk-reward ratio,” said Saji John, senior research analyst, Geojit Financial Services.

Ola Electric is the only automaker in India to receive PLI schemes for both advanced automotive technology and cell chemistry batteries. Despite profitability challenges and a loss in FY24, the company is poised to enhance profitability in the long term through improved scalability and by vertical integration.

Ola Eletric's motorbike foray

At their annual 'Sankalp' event, last week, the company introduced four new motorcycles across various price ranges. 

The company announced new products under the brand name 'Roadster', along with outlining the future roadmap across EV and energy verticals. With the launch of 'Roadster', 'Roadster X' and 'Roadster Pro', Ola Electric has entered the electric motorcycle segment and has further announced the integration of its cells in its own vehicles starting Q1FY26.

"While motorcycles dominate the broader two-wheeler market in India, their share in the EV segment is currently just 1 per cent, offering significant growth potential for the company. The launch is expected to positively impact as the company benefits from a first-mover advantage in the electric motorcycle segment and the potential for increased market penetration, Ola is likely to see enhanced revenue visibility over the long term. This strategic move could further strengthen its position in the EV market, contributing to sustained growth in its share price," Saji John said.

In the draft red hearing prospectus (DRHP) filed by Ola, the company said it is expecting e2W penetration to reach 41-56 per cent in FY28, while analysts at HSBC are expecting just c20 per cent by FY28 and 30 per cent by FY30. Range anxiety, the re-sale value and charging infrastructure remain major concerns for customer acceptance, in our view, the brokerage firm said in its coverage initiation report dated August 15.

Ola is unlikely to gain market share as incumbents are now equally aggressive and some of them have deep-pockets. Honda is yet to launch their EVs which will further add to competitive pressure, analysts said, adding, battery manufacturing is a plausible but risky proposition for Ola. 

"A failure to compete with global players on quality and yield may impact Ola’s competitive positioning and balance sheet strength," HSBC said. However, the stock has achieved the brokerage firm’s target price of Rs 140 per share.