Ola Electric's auto segment posts first-ever operating profit in Q2 FY26

Gross margins in the auto business expanded 510 basis points sequentially to 30.7 per cent, outperforming most internal combustion engine (ICE) two-wheeler manufacturers

Ola Electric said on Thursday its auto business for the first time reported an operating profit in the second quarter of the financial year (Q2 FY26), hailing the performance as a milestone in its efforts for financial sustainability.

 

The auto business focuses on the design, development, manufacturing, and sale of electric vehicles (EVs), along with core EV components. It posted an earnings before interest, taxes, depreciation, and amortisation (ebitda) margin of 0.3 per cent, compared to a loss of 5.3 per cent in the first quarter of FY26. Gross margin widened by 510 basis points sequentially to 30.7 per cent, surpassing those of most internal combustion engine two-wheeler manufacturers. The company said just 2 per cent of its earnings benefited from the government’s production-linked incentive (PLI) scheme.

 

 

Ola Electric said the results are a milestone in achieving sustainable profits and they were driven by expanding gross margins and disciplined cost control. Its consolidated revenue from operations in Q2 FY26 stood at Rs 690 crore and it delivered 52,666 vehicles in the quarter.

 

The auto business’s operating expenses reduced to Rs 258 crore from Rs 308 crore in Q1 F26. Consolidated operating expenses reduced to Rs 416 crore from Rs 451 crore. The company expects auto operating expenses (opex) to decline to Rs 225 crore by Q1 FY27, with consolidated opex targeted at Rs 350-375 crore through operational consolidation and technology-driven efficiencies.

 

Cash flow from operations (CFO) was Rs 40 crore, primarily due to a one-time festive inventory build-up of Rs 55 crore. Adjusting for the inventory, CFO was Rs 15 crore and shows that the auto business is cash generative, said the company.

 

Ola in Q2 FY26 introduced HyperService, a service that allows third-party garages and independent mechanics to join its network. Parts revenue contributes only 2 per cent of total revenue compared to an industry average of 10–15 per cent. With HyperService, the company aims to capture this high-margin segment while offering competitive customer pricing.

 

In Q2FY26, Ola Cell commissioned 2.5 GWh of capacity, becoming India’s first operational gigawatt-scale cell manufacturing facility. The firm plans to ramp up to 5.9 GWh by March 2026, and begin PLI-linked incentives from Q4FY26.

 

In the second half of FY26, Ola targets auto deliveries of around 100,000 units, with a focus on margin discipline amid rising competition.

 

In October, Ola launched Ola Shakti, India’s first residential battery energy storage system built with Bharat 4680 cells. The system integrates with rooftop solar, offers 5–10 hours of home backup, and provides twice the life compared to traditional lead-acid batteries. Ola expects Rs 100 crore in revenue in Q4FY26 and Rs 1,000–1,200 crore annually in FY27, with gross margins of 40–50 per cent.

 

The company also plans to enter the commercial and utility-scale energy storage market by Q1FY27, introducing 100 kWh to 5 MWh systems and scaling total cell capacity to 20 GWh by the second half of FY27.

 

It gave a full-year revenue guidance of Rs 3,000–3,200 crore, supported by Ola Shakti’s ramp-up in Q4. The auto segment is projected to exit FY26 with 40 per cent gross margin and 5 per cent segment ebitda, while the cell business is expected to achieve 30 per cent gross margins by early FY27 through both internal and external sales.