Ola Electric's profit push has been ignited. Now, volumes have to follow
Q1FY26 consolidated revenues rose 35.5% sequentially to ₹828 crore, while deliveries climbed 32.7%. Gross margin rose to 25.8% in Q1FY26 from 13.8% in Q4FY25, leading to an improvement in Ebitda margin to negative 29% from negative 114% in the same period.
Ola expects profitability to sustain and has guided for above 5% FY26 auto segment Ebitda margin after posting negative 11.6% margin in Q1FY26.
FY26 vehicle deliveries are pegged at 3.25 lakh–3.75 lakh units, which could be a tall order. Kotak Institutional Equities is baking in 3.10 lakh units in FY26. Ola projects its gross margin to rise further to 35–40% as PLI-linked savings from its Gen-3 scooters kick in.
It should be noted that Ola's Q1FY26 volumes declined 46% year-on-year despite the electric vehicle (EV) industry's two-wheeler volumes growing 7%.
Kotak has cut its FY26-FY28volume assumptions to the tune of 12-16%, given lower growth assumptions for the EV two-wheeler industry and sustained below expected volume offtake performance. 'An increase in competitive intensity will continue to weigh on the company's market share," said Kotak in a report on 14 July.
Moreover, execution risks persist. Ola's motorcycle rollout is still in early stages, with Roadster X in 200 stores and a national launch due by Navratri. While the initial response is positive, scale and further demand are untested. The company plans to launch a new product every quarter over the next two years.
Ola plans to spend ₹300 crore over the remaining nine months of FY26, with ₹400–500 crore in free cash flow required to fund the auto business. It expects the auto segment to turn FCF-positive by FY26's end. For its cell business, Ola will invest around ₹1,000 crore to build a 5 GWh facility, which it expects to break even by FY27.
Engineering bets continue as Ola's rare-earth-free motors are set to enter production in Q3FY26, with dual-sourced magnets added to reduce supply chain risk.
For now, Ola's numbers suggest a turning point. But for this rally to evolve into a rerating, the company will need to show consistency on volumes, margins, and execution.HSBC Securities and Capital Markets (India)analysts maintained their 'hold' rating and reckon the current valuation reflects all improvements.
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