Broker’s Call: Ola Electric (Sell)

Why It Matters

The downgrade signals heightened financial risk for Ola and underscores intensifying competition in India's fast‑growing electric two‑wheeler market, prompting investors to reassess exposure.

Key Takeaways

• Ola cut target price 60% to ₹20.
• Q3 revenue fell 55% YoY, volume down 61%.
• Market share slipped to 6%, ranking fifth.
• EBIT‑DAM loss widened to –58% in Q3.
• Cash turned to ₹670 cr net debt.

Pulse Analysis

India’s electric two‑wheeler (E2W) segment is expanding at double‑digit rates, driven by supportive policies and a shift toward sustainable mobility. While the overall market grew 33% in January and 24% in February 2026, incumbents such as Ather, TVS and Bajaj Auto have leveraged scale and brand credibility to capture the bulk of new demand. Ola Electric, once a market leader, now faces a stark contrast between industry tailwinds and its own operational headwinds, making its recent performance a bellwether for the sector’s competitive dynamics.

Ola’s Q3 results reveal a severe contraction: revenue collapsed by more than half and unit shipments fell from 125,000 in Q1 to just 32,000, eroding its market share to 6%. Although gross margin improved to 34.3% thanks to a one‑time PLI accrual, the company’s EBIT‑DAM turned sharply negative, expanding to –58% of sales. Cost‑control measures, including store rationalisation to 700 outlets and a revised OPEX ceiling of ₹250‑300 cr per quarter, aim to conserve cash, yet the balance sheet now reflects ₹670 cr of net debt after a prior cash surplus. This rapid swing raises concerns about liquidity and the ability to fund ongoing R&D and dealer support.

Looking ahead, Ola’s turnaround hinges on securing additional capital, possibly through a strategic stake sale in its battery arm, and regaining consumer confidence after widespread product‑service issues. Competitors are scaling production and deepening dealer networks, intensifying pressure on Ola’s market position. For investors, the Sell rating reflects both the immediate financial strain and the broader risk that Ola may lose relevance in a market where execution speed and cash resilience are paramount. Diversifying exposure to the broader E2W theme via peers like Ather, TVS and Bajaj may offer a more balanced risk‑return profile.

Broker’s call: Ola Electric (Sell)

Emkay Global · Updated · February 16, 2026 at 04:41 PM

Target: ₹20

Current Market Price (CMP): ₹28.83

We downgrade Ola Electric Mobility to Sell from Buy and cut our target price by 60 % to ₹20 from ₹50.

Ola logged a weak Q3, with revenue down 55 % year‑on‑year on a 61 % volume drop. Gross margin (GM) rose by 340 bps quarter‑on‑quarter to 34.3 %, aided by PLI accrual for Gen3. EBIT‑DAM losses expanded to –58 % versus –29 % in Q2. The underlying E2W theme is strong; the industry is seeing healthy growth (33 %/24 % year‑on‑year in Jan/Feb‑26), with a revival in penetration following a dip due to recent GST cuts.

However, Ola has seen a consistent volume decline to 32 k units in Q3 (Q1: 125 k) and market‑share loss (ranked 5th, with 6 % share). Ola is undertaking several measures to improve execution (e.g., store rationalisation to 700 stores) and cut costs/conserve cash (guidelines for ₹250‑300 cr per quarter opex vs ₹430 cr in Q3) and improve brand perception amid severe product/service issues (>1 million E2Ws sold since launch).

We believe that this could be a difficult, long‑drawn process, especially amid greater focus from incumbents and scale‑up at Ather. The turnaround would also require Ola to have a strong cash balance to survive this phase. As per our calculations, Ola has turned net debt as of 9M‑FY26 (₹670 cr) from net cash of ₹160 cr in H1FY26.

Upside risk could stem from a strategic stake sale in the battery business, resulting in a meaningful cash infusion. We prefer to play the E2W theme with Ather, TVS and Bajaj Auto.

Published on February 16, 2026