Ola Electric shares fall 3% on profit booking. Should you buy or sell after Q1 results?
shares declined 3.08% to ₹45.63 as investors booked profits after an 18% surge in the previous session, paring gains from the recent rally.
On Monday, Ola Electric Mobility reported a consolidated
net loss
that widened by 23% to ₹428 crore for the quarter ended June 30, 2025. However, the loss was lower than Kotak Institutional Equities' expectations. Despite this, the research firm maintained its "SELL" rating with an unchanged fair value of ₹30, based on DCF methodology.
The report stated, "Ola Electric's 1QFY26 losses were lower than our estimates, driven by-
1. Better-than-expected volume offtake (7k units pertaining to previous quarter backlog)
2. Better-than-expected gross margin (Gen-3 shift)
3. Reversal in warranty provisioning, and (4) cost-control measures.
While the company has improved its profitability significantly, volume offtake remains below expectations given muted industry growth and increased competitive intensity, which remains an area of concern. Maintain SELL with an unchanged FV of ₹30 based on DCF methodology (3.5X FY2027E EV/sales)."
The company reported a consolidated net loss that widened by 23% to ₹428 crore for the quarter ended June 30, 2025, compared to ₹347 crore in the same period last year. Revenue from operations dropped sharply by 49.6% year-on-year to ₹828 crore. The revenue from operations compares with ₹1,644 crore reported in the corresponding quarter of the previous financial year.
'While profitability is improving, another major highlight is cash flow. Our auto business was almost neutral on operating cash flow in Q1, with a marked improvement in free cash flow (FCF) to -₹107 crore for the auto segment and -₹282 crore on a consolidated basis,' the company said in a letter to its shareholders.
Further, the company expects the operating cash flow of its auto business to turn positive later this year. It noted that the auto segment requires minimal sustenance capex, with most capital expenditure directed towards research and development, followed by limited growth capex.
The company managed to reduce its total expenses by 42.4% YoY to ₹1,065 crore, down from ₹1,849 crore in the same period last year.
The EBITDA margin also stood at -28.6% in Q1 FY26, compared to -12.5% in the corresponding quarter of the previous fiscal year.
However, Nomura Research maintains a positive view on EV margins, emphasizing a major transition in the Indian electric two-wheeler (E-2W) industry as it shifts from subsidy-led growth toward a more sustainable and profitable phase.
Nomura Research "The Indian E-2W industry is transitioning from a subsidy-led growth phase to a more sustainable model. Industry-wide profitability is gradually improving as players focus on better cost structures, in-house capabilities (like batteries, ABS, and motors), and larger volumes. Battery costs have started declining again in recent quarters, supporting margin expansion and reducing price pressure. Simultaneously, there is a visible shift toward better quality and more reliable products, especially in the mass segment, which is critical to capturing the next leg of demand."
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