Ola Electric Jumps Over 5% As BofA, Goldman Sachs Initiate Coverage With 'Buy' Rating

Ola Electric rebounded on Tuesday, jumping above 5%, after brokerages showed optimism on the company even as it cedes market share to competitors.

What Happened: Global brokerages Bank of America and Goldman Sachs were bullish on the Bengaluru-based firm, with BofA giving it a “buy” call with a target price of ₹145.

Ola Electric is the largest electric two-wheeler company in India, with 40% of its e-scooters now priced even below petrol scooters, marking a significant inflection point in the electric vehicle curve, the brokerage noted. The company has addressed key aspects of the electric vehicle puzzle, which is an expanding product portfolio, the research firm added.

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Bank of America sees electric vehicles reaching a penetration rate of 18% by FY28 and 25% by FY30 in the two-wheeler segment.

Goldman Sachs initiated coverage on the stock with a “buy” call and a target price of ₹160. The company is seen as well-positioned to benefit from long-term structural trends in India’s electric two-wheeler market, it said.

Debates around in-house battery cell manufacturing, direct to-consumer sales and after-sales services are likely seen as drivers of volatility for the stock in the coming year, the brokerage said.

Goldman Sachs expects Ola Electric’s revenue to grow at a 40% annual rate from FY24 to FY30, with free cash flow expected to break even by FY30. By then, the company is also likely to achieve an EBITDA margin of 11.9% and a return on invested capital of 27%.

Key risks to its forecast include how competitors will respond and whether the company can successfully implement its in-house cell manufacturing plans, the brokerage added.

Price Action: Shares of Ola Electric gained 5.30% to trade at ₹113.30 on Tuesday morning.

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