Why Did Kotak Securities Cut Ola Electric’s Target Price by 40%?
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Synopsis
On May 30, Kotak Securities made headlines by cutting Ola Electric’s target price by a staggering 40%. This decision was fueled by alarming financial losses and fierce competition in the electric vehicle marketplace. Can Ola Electric navigate through these challenges and regain its footing?
Key Takeaways
- Kotak Securities has reduced its target price for Ola Electric by 40%.
- The company's share price fell significantly following the announcement.
- EBIDTA losses are expected to continue.
- Ola's future hinges on scaling up production and overcoming operational challenges.
- Competitive pressures in the electric vehicle market are intensifying.
New Delhi, May 30 (NationPress) On Friday, Kotak Securities dramatically reduced its target share price for Ola Electric by 40% from Rs 50 to Rs 30, attributing this decision to ongoing losses and intensifying competition.
Shares of Ola Electric Mobility plummeted by 9.7% to an intraday low of Rs 48.07 on the BSE as the electric two-wheeler manufacturer disclosed a significant increase in losses for the March quarter.
Kotak Securities pointed out two primary concerns. It anticipates that EBIDTA losses will persist, fueled by diminishing brand equity and heightened competitive forces.
Moreover, Kotak underscored that the future trajectory of Ola Electric hinges on increasing production volumes and successfully implementing its motorcycle strategy. However, the firm cautioned that the motorcycle venture faces execution and credibility hurdles.
Furthermore, the brokerage noted that the company must boost its volumes to avert an impending cash flow crisis.
The financial performance of the Bhavish Aggarwal-led electric vehicle company suffered a severe setback in the fourth quarter (Q4) of FY25, as it reported a substantial decline in revenue and a twofold increase in year-on-year (YoY) net losses.
In its stock exchange filing, the company indicated a net loss of Rs 870 crore for the January-March quarter (Q4), up from Rs 416 crore in the corresponding quarter of the previous fiscal year (Q4 FY24).
Revenue from operations drastically fell to Rs 611 crore in Q4 FY25, representing a 61.8% decrease from Rs 1,598 crore a year earlier. This marks one of the company’s most disappointing quarterly revenue performances since launching commercial deliveries of its electric two-wheelers in late 2021.
This decline occurs amid increasing competition in the electric scooter sector, uncertainties surrounding government subsidies, and inventory adjustments at dealerships. For the entire fiscal year FY25, Ola Electric’s revenue also dropped to Rs 4,645 crore, down from Rs 5,126 crore in FY24.
Point of View
I believe the dramatic price cut by Kotak Securities reflects the significant challenges facing Ola Electric. The firm must address its operational hurdles and strengthen its brand equity to regain investor confidence and establish a foothold in an increasingly competitive market.
NationPress
08/09/2025
Frequently Asked Questions
Why did Kotak Securities lower Ola Electric's target price?
Kotak Securities lowered the target price due to ongoing financial losses and increasing competition in the electric vehicle market.
What was the new target price set by Kotak Securities?
The new target price for Ola Electric has been set at Rs 30, down from Rs 50.
How much did Ola Electric's shares drop after the announcement?
Ola Electric's shares dropped by 9.7% to an intraday low of Rs 48.07.
What are the main concerns highlighted by Kotak Securities?
Kotak Securities highlighted concerns regarding persistent EBIDTA losses and the execution challenges of Ola's motorcycle plans.
What was Ola Electric's net loss for the January-March quarter?
Ola Electric reported a net loss of Rs 870 crore for the January-March quarter.
