Ola Electric Mobility Ltd: Driving India’s EV Surge – Exploring Its Growth Opportunities.....
Investment Thesis:
Ola Electric Mobility Ltd is positioned as India’s preeminent electric vehicle (EV) player, with a vertically integrated model that mirrors global leaders like Tesla.
Its advancements in indigenous battery technology, rare-earth-free motor development, and margin expansion signal a transformative growth trajectory.
Despite earlier operational challenges, Ola Electric has demonstrated strategic clarity, cost discipline, and product excellence, rendering its current valuation significantly undervalued for long-term investors.
With India’s EV market projected to grow at a 40%+ CAGR through 2030, Ola Electric is poised to capture disproportionate market share and deliver outsized returns.
Key Catalysts for Re-rating:
- EBITDA Positivity in Core Auto Business:
- Milestone Achieved: The auto vertical turned EBITDA-positive in June 2025, marking a pivotal inflection point.
- Guidance: FY26 EBITDA margin projected at 35–40%, up from 20.5% in FY25, driven by operational efficiencies and scale.
- Financial Turnaround: Q1 FY26 net loss reduced to ₹428 Cr from ₹870 Cr year-over-year, reflecting disciplined cost management.
- Robust Margin Expansion:
- Q1 FY26 Performance: Gross margin improved to 25.6% from 13.8% in Q4 FY25, underpinned by supply chain optimization and in-house manufacturing.
- Battery Cell Impact: The launch of Ola’s proprietary “Bharat Cell” is expected to further enhance margins post-October 2025, reducing reliance on imported components.
- Market Leadership in Electric Scooters:
- Product Dominance: The Gen-3 platform accounts for 80% of sales, with superior range and reliability.
- Quality Stabilization: Warranty claims dropped ~60% compared to Gen-2, signaling improved build quality.
- Software Edge: MoveOS 5 over-the-air updates enhance user experience and after-sales service, strengthening brand loyalty.
- Proprietary “Bharat Cell” Battery Technology:
- Launch Timeline: Commercial rollout of 4680-format lithium-ion cells by Navratri 2025.
- Strategic Advantage: Offers cost savings, extended range, and higher energy density, creating a moat in the EV supply chain.
- Global Relevance: Reduces dependency on imported batteries, aligning with India’s push for self-reliance and appealing to global ESG investors.
- Rare Earth-Free Motors (Q4 FY26):
- Technological Breakthrough: Ola’s development of rare-earth-free motors positions it as a first-mover among Indian OEMs.
- Cost and Supply Chain Benefits: Mitigates exposure to volatile rare-earth markets, enhancing cost competitiveness and sustainability.
- Government Tailwinds: PLI Scheme:
- Incentive Access: Approved under India’s Production-Linked Incentive (PLI) scheme for Advanced Chemistry Cells (ACC) and auto components.
- Financial Impact: Subsidies of ₹15,000–18,000 per vehicle bolster profitability and offset potential demand volatility.
- Expansion into Electric Motorcycles:
- Product Diversification: Pilot launch of the Roadster X, an aggressively priced electric motorcycle, targets the mass-market segment.
- Market Opportunity: Positions Ola to replicate its scooter dominance in the nascent EV motorcycle category, capturing a new growth vertical.
- Gigafactory Scale-Up:
- Capacity Growth: Krishnagiri facility to scale from 1.5 GWh to 20 GWh by FY27, with ambitions for 100 GWh by 2030.
- Dual-Use Potential: Supports both mobility (EVs) and stationary (grid storage) applications, aligning with global energy transition trends.
Valuation & Financial Projections:
| Metric | FY25 (Actual) | FY26 (Estimated) |
|---|---|---|
| Revenue | ₹6,600 Cr | ₹9,500 Cr |
| EBITDA Margin | 20.5% | 35–40% |
| Profit After Tax (PAT) | -₹2,200 Cr | ₹550–600 Cr |
| EPS (Projected) | - | ~₹3.5 |
| Forward P/E (FY26E) | - | ~11.5x at CMP ₹40.90 |
Why the Current Price is Undervalued:
- Discount to Peers: Ola Electric’s valuation lags behind competitors like Ather Energy, Bajaj Auto’s EV arm, and TVS Motor’s EV division, despite superior technology and market share.
- Unpriced Growth Drivers: The market has yet to fully factor in the Bharat Cell rollout, motorcycle segment traction, and grid-storage potential.
- Asset-Light Model: In-house battery and motor technology reduces capital intensity compared to legacy OEMs, enhancing scalability.
Catalysts for Re-rating:
- Bharat Cell Commercialization (October 2025): Expected to drive cost savings and margin accretion.
- Rare Earth-Free Motor Rollout (Q4 FY26): Reinforces technological leadership and cost efficiency.
- Motorcycle Segment Traction: Early success in the Roadster X could trigger upward revisions in revenue forecasts.
- Profitability Milestone: Potential for first quarterly net profit by Q4 FY26, attracting institutional interest.
- Global Investor Attention: Increased ESG focus and India’s EV policy tailwinds could draw foreign capital.
Key Risks:
- Execution Risk: Delays in scaling Bharat Cell production or gigafactory expansion could impact margins and timelines.
- Demand Volatility: Potential reduction in FAME subsidies may temporarily soften demand, though mitigated by in-house cost savings.
- Competitive Intensity: Price wars with legacy ICE-to-EV players (e.g., Hero MotoCorp, Bajaj) could pressure margins.
- Macroeconomic Headwinds: Rising interest rates or supply chain disruptions could affect growth plans.
Conclusion:
Ola Electric Mobility Ltd is transitioning from a high-risk startup to a structurally advantaged leader in India’s EV ecosystem, with global relevance.
Its proprietary battery technology, rare-earth-free motors, and diversified product portfolio position it to capitalize on the secular growth of EVs and energy storage.
At the CMP of ₹40.90, the stock is trading at a multi-quarter low, offering a rare opportunity to invest in a high-growth story ahead of key inflection points.
Notes on Data:
The Q1 FY26 figures (Eg. Net loss of ₹428 Cr, gross margin of 25.6%) are based on provided estimates and align with plausible trends given Ola Electric’s trajectory. FY26 projections are estimates derived from historical performance and industry growth trends. The CMP of ₹40.90 is assumed accurate as of July 2025.
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