Ola Electric Mobility Ltd extended its rally on Thursday, with shares rising over 6% to hit a high of Rs 93.60 in early trade. With this, the stock has gained over 35% in the last five sessions and has surpassed the Rs 90 target set by Citi on November 26.
The brokerage had initiated coverage with a ‘Buy’ rating, citing Ola Electric’s dominance in the Indian electric two-wheeler (E2W) market and its long-term growth potential.
Citi highlighted Ola Electric’s leadership position with a 38% market share in FY25 YTD. It also factored in the company’s broad product portfolio, robust R&D focus, vertical integration including Li-ion cell manufacturing, and large-scale production.
Upcoming launches such as motorcycles and electric three-wheelers are expected to be key volume drivers.
While service-related concerns have been a challenge, Citi expects these issues to diminish over time.
“We admit service perception has been negative of late but expect it to subside over the medium term as back-end supply chain catches up with volume growth,” the brokerage said.
Valued at 4x FY26 EV/sales, Citi sees Ola’s leadership in the E2W market as a strong advantage.
“Our target multiple is based at 10% premium to the average of the implied target EV/sales multiples for the 4 listed 2W OEMs under our coverage. We believe the premium is merited given Ola’s dominance in the E2W segment and potent long-term growth opportunities,” Citi noted.
Despite its positive stance on Ola, Citi still prefers Eicher Motors and Hero MotoCorp over Ola Electric due to their established positions and better profitability metrics. The brokerage highlighted Ola’s lack of EBITDA profitability but added that economies of scale and technology investments could improve its profitability over time.
Ola’s upcoming Gen 3 platform and increased capacity utilization are expected to enhance profitability, according to Citi. However, risks like low EV penetration, stiff competition, and sustained service quality concerns could weigh on its prospects in the near term.
As of 12:41 pm, shares of Ola Electric were trading 3.06% higher at Rs 90.86 on the Bombay Stock Exchange (BSE).
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)
