Ola Electric surges 20% on strong Q1 results, but analysts still advise caution

Synopsis

Ola Electric shares surged 20% following better-than-expected Q1 results, showcasing narrowed losses and improved margins. Revenue increased to ₹828 crore, driven by successful Gen 3 scooter launches. Despite a bullish outlook and retail investor interest, analysts advise caution due to market share competition and past overly optimistic guidance, suggesting a high-risk profile for the stock.

Mumbai: Shares of electric two-wheeler maker Ola Electric Mobility rallied about 20% on Monday, the biggest single-day move in eight months, after the company's first-quarter results were better-than-expected. The stock is best suited for high-risk traders and investors, as analysts warn of continued sharp price swings in months ahead. Ola ended at ₹47.7 on Monday, up 19.75%, after hitting a fresh 52-week low of ₹39.6.

"Ola Electric's Q1 shows a sharp operational turnaround-losses narrowed from ₹870 crore to ₹428 crore, gross margins hit a record 25.6%, and the auto segment turned Ebitda (earnings before interest, taxes, depreciation, and amortization)-positive in June," said Jahol Prajapati, research analyst at Samco Securities.

Its revenue from operations also rose to ₹828 crore in the June quarter from ₹611 crore in the previous quarter. However, it was down almost 50% from the same period a year ago. "The company's bullish forecast of 35-40% margins and upcoming ramp-up of new products further renewed interest in the stock," said Sagar Shetty, research analyst, StoxBox. "The growth during the quarter was largely supported by the successful launch of its Gen 3 scooters, aiding the company to maintain accretive margins."

The company said in an exchange filing that it expects to sell between 325,000 and 375,000 vehicles and generate revenue of ₹4,200-₹4,700 crore for FY26. Ola shares are down around 48% since their debut in August 2024. As the stock declined, retail investors increased their stakes in the company. The percentage of retail shareholders holding less than ₹2 lakh in the company has increased to 12% in the March quarter from 4.45% at the time of listing. Shetty said that Ola continues to cede significant market share to established players and has a track record of overly optimistic guidance.

"We recommend investors maintain a cautious approach and suggest that they wait to see how the second quarter unfolds in terms of sales and overall performance," he said. Prajapati said Ola is building a 'credible profitability' story, on account of continued cost discipline, improving warranty dynamics, and an FY26 target of 35-40% gross margins. "For investors with a high-risk appetite, it's a bold EV play on vertical integration. Conservative investors might still prefer steadier names like TVS or Bajaj for now," he said.

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