A leading electric vehicle manufacturer known for innovative two-wheelers faces a pivotal moment. This article examines its potential comeback, driven by market share, cost reductions, new product launches, and financial reserves, against challenges like regulatory issues, falling sales, competitive pressures, and service concerns. Recovery hinges on balancing these critical factors.
Ola Electric Mobility Limited’s stock, with a market capitalisation of Rs. 22,257 crores, fell to Rs. 48.06, falling by 9.7 percent from its previous closing price of Rs. 53.24. Furthermore, the stock over the past year has given a negative return of 45 percent.
Key Highlights
Why a comeback is possible: Ola’s 30 percent market share, cost cuts (opex to Rs 110 crore by June), new Roadster X motorcycle, Rs 4,000 crore cash reserves, PLI benefits, and in-house cell production from Q1 FY26 could drive profitability.
Why not: Regulatory scrutiny, showroom closures, a 52 percent drop in registrations, intense competition from Bajaj/TVS, and persistent customer service issues could derail recovery efforts.
Also read: Auto ancillary stock skyrockets 16% after reporting 57% YoY net profit growth; Declares 275% dividend
Factorwise Analysis
Why a comeback is possible
- Cost Optimisation: Ola’s Project Lakshya and Project Vistaar have reduced operating costs to Rs 121 crore in April 2025, targeting Rs 110 crore by June. The company lowered its EBITDA break-even point to under 25,000 units per month, which could drive profitability if sustained.
- New product launches: The launch of the Roadster X electric motorcycle targets rural and Tier-3 markets, leveraging Ola’s 4,000-touchpoint direct-to-consumer network. With India’s motorcycle market nearly double the scooter segment, this could boost volumes
- Financial Strategy: Ola’s gross cash stood at Rs 4,000 crore, and it plans to raise Rs 1,700 crore through non-dilutive debt to refinance obligations. Modest FY26 capex (Rs 100-200 crore) and Rs 1,600 crore for cell manufacturing (partly funded by debt and equity) could support growth without excessive dilution
- Market Recovery: Ola forecasts Q1 FY26 revenue of Rs 800-850 crore and an auto EBITDA margin of -10 percent, aiming for EBITDA breakeven by June-July 2025. Benefits from the Production Linked Incentive (PLI) scheme and integration of in-house 4680 cells from Q1 FY26 could improve margins.
Why not
- Operational Issues: Customer complaints, service network limitations, and a 55 percent drop in Q4 vehicle registrations signal execution challenges.
- Regulatory Hurdles: Ola faced showroom closures in Maharashtra for lacking trade licenses, and discrepancies in reported sales (25,000 units) versus registrations (8,600) in February 2025 raised government scrutiny
- Sales vs. Registration Discrepancies: The Ministry of Heavy Industries (MHI) and the Ministry of Road Transport and Highways (MORTH) are investigating a gap between Ola’s reported sales (25,000 scooters in February 2025) and actual registrations (8,652 per Vahan portal). This mismatch raises concerns about compliance with Indian laws prohibiting delivery of unregistered vehicles. Ola attributes this to a temporary registration backlog due to vendor disputes, with 40 percent cleared by March 2025.
- Trade Certificate Violations: Over 95 percent of Ola’s 4,000 showrooms (approximately 3,300) lack trade certificates required under the Motor Vehicles Act to display, sell, or offer test rides on unregistered vehicles. Maharashtra RTO inspections led to 36 scooters seized in Mumbai and Pune and showroom closures in Punjab, and notices in four states (Maharashtra, Punjab, Rajasthan, and Madhya Pradesh).
Near-Term View
Ola’s leadership in the electric two-wheeler market, cost-cutting measures, and strategic expansion into motorcycles provide a foundation for recovery. However, addressing regulatory issues, improving operational transparency, and countering competition are critical. If Ola achieves its projected Q1 FY26 recovery and EBITDA breakeven, a turnaround is feasible. Investors should monitor execution closely, as risks remain high.
Written By Fazal Ul Vahab C H
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