Latest news with #500
Mint
an hour ago
- Automotive
- Mint
Ola Electric's losses widened but the stock rallied. What's going on?
Known for its aggressive expansion, Ola Electric's pivot towards profitability has brought relief to investors. To be sure, revenues halved in the last reported quarter, and losses widened. But management'sintent to shift focus towards profitability, close on the heels of the auto business' first Ebitda-positive month, has kindled hopes of a long-awaited turnaround in the business. After eroding more than half of investors' wealth since listing, the stock rallied almost 20% on Monday. Is this the light at the end of the tunnel for Ola investors, or is it a sucker's rally? Earnings continue to disappoint Founded in 2017, Ola Electric was among the first movers in the electric two-wheeler space. Over the years, it has burnt cash with competitive pricing and aggressive marketing in an attempt to cement its lead. But customer complaints around product quality and after-sales service indicate that in the race for growth, quality may have taken a backseat. The latest quarter's numbers released this week were largely more of the same — falling revenues and widening losses. Compared to the same quarter last year, revenues halved to ₹828 crore and loss widened from ₹347 crore to ₹428 crore. Green shoots spur hope However, revenue increased and losses narrowed compared to the previous quarter. Q1 losses were also smaller than expected, thanks to higher operating leverage on the back of volumes propped up by the previous quarter's backlog. Gen-3 scooters made up 80% of sales during the quarter, and their higher prices supported gross margin. Ola also claims superior product quality was the reason behind the reversal of warranty provisions seen during the quarter. Declining battery prices also helped contain losses. The result? Despite falling short of the previously cited breakeven threshold of 25,000 unit sales a month, the company's auto business turned profitable at the Ebitda level in June. It was also near breakeven on operating cash flows during the quarter. Management indicated that apart from R&D, no large capex was planned for FY26. These green shoots have spurred hopes that aggressive expansion is a thing of the past and that Ola Electric's auto business may have now stepped into its next phase – profitable growth. Profitability over PLI As for Ola's cell manufacturing business, it had signed an MoU to invest Rs.4,500 crore by 2024 towards setting up 20 GWh of capacity to qualify for incentives under the government's production-linked incentive (PLI) scheme. But the company plans to invest only ₹1,000 crore to expand capacity to 5GWh, and focus on profitability thereafter. While industry players including Ola are in discussions with the government, seeking leeway on the PLI targets, Ola has indicated that it will expand cell manufacturing only to the extent that it supports its vehicle sales. It expects the cell business to break even at 3.5-4 GWh by FY27, and does no expect to need more than 5 GWh until FY29. Management has indicated it is unwilling to extend the breakeven timelines just to meet PLI targets, even if this means coughing up penalties of up to ₹100 crore. Competition may continue to play spoilsport While Ola was among the first companies to tap India's electric scooter market, its reputation has suffered some serious damage over the years. Its technological moat has also been eroded by competitors. So, when legacy two-wheeler manufacturers including TVS and Bajaj entered the EV space, Ola's market share slipped sharply from 50% to less than 20% in a year. The only other listed pure-play EV manufacturer, Ather Energy, gained ground during the period. A smaller share of a fast-growing pie would not have been as much of a bother. But the pie has also been growing more slowly. Government initiatives to boost electric two-wheeler sales are gradually being phased out. FAME-II concluded in March 2024, and electric mobility promotion scheme (EMPS) is set on glide path down to just Rs.5,000 worth of subsidies per scooter by 2026. Thus the onus is now increasingly falling on organic adoption of electric two-wheelers. Though electric scooters still constitute only about 7% of all EVs sold in India, sales growth has moderated. This explains the manufacturers' pivots from aggressive market penetration to profitable growth. Ola had to slash 1,000 jobs in FY25 to rein in losses. Ola's deeper issues persist Ola's troubles run deeper than industry headwinds. While the electric two-wheeler segment registered a robust 31.7% growth in June, Ola's sales fell 45%. The company's brand image has been hurt by widespread service issues and customer complaints, which caused the Central Consumer Protection Authority) to step in at one point. Ola responded by resolving a bulk of the pending complaints and investing in doubling its footprint to 4,436 stores. The bulk of these as company owned and company operated, piling on further losses and draining cash. But service issues have apparently persisted. Recently, Ola's flagship electric motorcycle, Roadster X Plus, was in the news as several customers complained about charging issues. The company has also had issues with registration agencies, after which it moved registration in-house. This led to backlogs in registration and invoicing, discrepancies between reported sales and registrations, and delays in deliveries. While the company now claims to have cleared the backlog, it was almost dragged to insolvency over the conflict. This month Ola faced a shutdown of most of its stores in Maharashtra, India's largest electric scooter market. The company is working with the authorities to resolving the issue, which pertains to its store permits and trade certificates. Ola had also seen a string of management exits, further eroding the brand's reputation. Overoptimistic projections? Management has guided for 3.25-3.75 lakh vehicle deliveries and ₹4,200-4,700 crore of revenue during the year. With Q1 revenue at just about ₹800 crore, the guidance optimistically projects average quarterly revenue at ₹1,100-1,300 crore for the rest of the fiscal year. The sharp pickup in revenues assumes strong traction of the company's new launches – one every quarter over the next two years. Management expects gross margin to expand from 26% in Q1 to 35-40%, and has guided for at least 5% Ebitda margin for the full fiscal year. It also expects operating cash flows to turn positive by the end of FY26. A lot seems to be riding on its Gen-3 scooters – higher gross-margins, reduced warranty claims, and PLI benefits kicking in from Q2. Meanwhile, its ongoing efforts at vertical integration towards manufacturing cells and rare-earth-free motors are expected to help control costs, enhance performance, and improve supply-chain resilience. The company is also counting on Project Lakshya to cut costs. While cost savings in Q1FY26 have been attributed to the project, lower battery prices are likely to have also played a role. The proof will be in the pudding. If revenue growth accelerates, margins expand in line with management's guidance, and customer complaints taper off, investors will feel reassured that Ola Electric is walking the talk. For more such analysis, read Profit Pulse. Ananya Roy is founder of Credibull Capital, a SEBI-registered investment adviser. X: @ananyaroycfa Disclosure: The author does not hold shares of the companies discussed. The views expressed are for informational purposes only and should not be considered investment advice. Readers are encouraged to conduct their own research and consult a financial professional before making any investment decisions.
The Star
an hour ago
- The Star
Clerk loses over RM126,000 to syndicate posing as police officer, prosecutor
KUANTAN: A clerk has lost RM126,500 to an online fraud syndicate whose members posed as insurance officer, police and public prosecutor, in November last year. Acting Kuantan district police chief Supt Mohd Adli Mat Daud said the 56-year-old man received a phone call from an individual claiming to be an insurance company representative, stating that there was a fake insurance claim using the victim's name. "The call was then connected to another individual posing as a police officer and public prosecutor, who informed the victim that he needed to make a bail payment of RM68,000 to resolve the case," he said in a statement on Wednesday (July 16). He said the panicked victim then made three separate transactions totalling RM126,500 into three different bank accounts using a cash deposit machine. "The victim only realised he had been scammed after failing to contact the relevant party again, so he lodged a police report at 12.15pm on Wednesday. The money used was from the victim's own savings," he said. In this regard, he advised the public not to panic if they received calls from unknown individuals and were encouraged to contact the National Scam Response Centre (NSRC) at 99, should they become a victim of a scam. Meanwhile, Mohd Adli said his party had also introduced a digital platform based on artificial intelligence (AI) GPT SEDARScam to assist in the early prevention of crime in the community. - Bernama
Barnama
2 hours ago
- Barnama
Clerk Loses Over RM126,000 To Syndicate Posing As Police Officer, Prosecutor
KUANTAN, July 16 (Bernama) — A clerk suffered a loss of RM126,500 after being duped by an online fraud syndicate posing as insurance officer, police and public prosecutor, in November last year. Acting Kuantan district police chief Supt Mohd Adli Mat Daud said the 56-year-old man received a phone call from an individual claiming to be an insurance company representative, stating that there was a fake insurance claim using the victim's name. "The call was then connected to another individual posing as a police officer and public prosecutor, who informed the victim that he needed to make a bail payment of RM68,000 to resolve the case," he said in a statement today.
New Straits Times
2 hours ago
- New Straits Times
Driver charged with reckless driving after jogger injured in crash
TAWAU: A pickup truck driver claimed trial at the magistrate's court here today to five charges, including injuring a male teacher who was jogging by the roadside last month. Mohd Hikmal Bolong, 29, pleaded not guilty after all the charges were read out before magistrate Don Stiwin Malanjum. He was charged under Section 42(1) of the Road Transport Act 1987 with driving recklessly and causing an accident involving the 33-year-old victim at Batu 3, Jalan Apas, at about 3.55am on June 7. As a result of the crash, the teacher sustained serious injuries, including mild traumatic brain injury with intracranial bleeding, a laceration to the back of the head, liver injury, fractured ribs, and severe wounds to his right leg. The accused also faces four additional charges under Sections 52(1), 52(2), 15(1)(a), and 90(1) of the same Act. Prosecuting officer Assistant Superintendent Joan Lee, from the Traffic Enforcement and Investigation Division at the Tawau district police headquarters, proposed bail of RM6,500 with two local sureties based in Tawau and Kunak. The court fixed Aug 20 for mention and submission of documents.
New Straits Times
3 hours ago
- New Straits Times
Clerk loses RM126k to insurance scam
KUANTAN: A clerk attempting to post a RM68,000 bail after his identity was allegedly linked to a fake insurance claim ended up losing RM126,500 of his savings to fraudsters. The 56-year-old victim from Kuantan only realised after six months that he had fallen victim to an insurance scam. Acting Kuantan police chief, Superintendent Mohd Adli Mat Daud, said the incident began in November last year when the man received a phone call from an individual claiming to represent an insurance agency. "The caller alleged that the victim's name had been misused to file fraudulent insurance claims. The call was then transferred to two other individuals posing as a police officer and a prosecuting officer. "The victim was informed that he had to pay RM68,000 in bail to settle the case. He made three separate transactions through a cash deposit machine into three different bank accounts," he said in a statement today. Adli said the victim transferred a total of RM126,500 from his savings between Dec 5 last year and June 1 this year. He said that the victim realised he had been scammed when he was no longer able to contact the individuals involved and lodged a police report yesterday. Adli advised the public not to panic or share personal information when receiving calls from unknown individuals. The public are advised to verify account numbers at before making any transactions.
