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Ola Electric Mobility Share Price: The share price continued its winning streak for the fifth consecutive session; Should you buy?
Ola Electric Shares Jump 40% in 5 Days
Ola Electric Mobility Share Price: Ola Electric Mobility Ltd saw its shares surge by over 6% on Thursday, November 28, 2024, extending its five-day rally to a remarkable 39%. The stock hit a high of Rs 93.60, surpassing the Rs 90 target set by Citi on November 26 when it initiated coverage with a ‘Buy’ rating.
Citi’s positive outlook on Ola Electric stems from its position as the largest electric two-wheeler player in India, holding a 38% market share in FY25YTD. Citi highlighted Ola’s broad product portfolio, strong R&D focus, significant vertical integration (including Li-ion cell manufacturing), and large-scale production capabilities. The firm also noted the potential for volume growth with the upcoming launches of motorcycles and electric three-wheelers (E3Ws).
Despite some negative service perceptions, Citi expects these issues to diminish as Ola’s supply chain catches up with the growing volume of sales. The brokerage identified key risks such as weak overall EV penetration, rising competition, ongoing concerns about product/service quality, technology obsolescence, and continued net losses.
Although Citi prefers Eicher Motors and Hero MotoCorp over Ola Electric, it views Ola more favorably than Bajaj Auto and TVS Motor. Citi has set target prices for these companies, including Rs 7,800 for Bajaj Auto, Rs 1,700 for TVS Motor, and Rs 6,300 for Hero MotoCorp. For Eicher Motors’ Royal Enfield business, Citi’s valuation is 6.3 times FY26 EV/sales.
Since Ola has not yet achieved EBITDA break-even, Citi used a sales-based valuation method (4x FY26 EV/sales) to arrive at a target price of Rs 90. This target price reflects a 10% premium to the average of implied target multiples for the four listed two-wheeler OEMs covered by Citi. This premium is justified by Ola’s dominant position in the rapidly growing electric two-wheeler segment and its strong long-term growth prospects, according to Citi.
The firm also noted that Ola’s large production scale gives it economies of scale, which should improve profitability as capacity utilization increases. Ola has been heavily investing in technology, as evidenced by the attractive features of its vehicles and strong backward integration, including Li-ion cell manufacturing. The company believes its new Gen 3 platform will significantly boost profitability. While service issues have arisen, Citi expects these to subside in the medium term as supply chain improvements take effect.
Shares Jump 40% In Just 5 Days
Ola Electric’s stock has surged by 40% in the past five trading sessions, marking a strong recovery. However, it remains 41.4% below its all-time high of Rs 157.40, reached in mid-August. The stock is currently trading 20.8% higher than its IPO price of Rs 76.
Ola Announces Entry Into The Commercial Segment
On Tuesday, Ola Electric also announced its entry into the commercial segment with the launch of its ‘Gig’ range of scooters, priced at Rs 39,999. These scooters are designed for gig workers who travel long distances with heavier payloads. In addition, Ola introduced the S1 Z model, a personal-use electric scooter priced at Rs 59,999, aimed at urban commuters. The new scooters feature portable batteries that can double as inverters, allowing users to power small household appliances like lights and fans via the Ola PowerPod.
Along with the Ola Gig and S1 Z models, Ola Electric offers an expanded S1 scooter portfolio with six variants catering to various customer needs. The premium S1 Pro and S1 Air are priced at Rs 1,34,999 and Rs 1,07,499, respectively, while the more affordable S1 X portfolio, including 2 kWh, 3 kWh, and 4 kWh variants, is priced at Rs 74,999, Rs 87,999, and Rs 1,01,999, respectively.
