**Ola Electric Faces Analyst Scrutiny Amid Profit Focus**
Ola Electric’s recent performance has caught analysts off guard, prompting a flurry of inquiries for clarification. Arun Kejriwal, founder of Kejriwal Research and Investment Services, questioned the company’s strategy, noting, “You are Ebitda positive, as guided last time, but it seems to have come at the cost of sacrificing volume. Could you help us understand what gives you comfort that this trade-off is sustainable and strategically sound?”
In response, CEO Bhavish Aggarwal defended the company’s revised guidance, emphasizing improvements in gross margins and operating costs. He indicated that Ola Electric is currently focused on streamlining operations, which he believes will position the company to lead in the electric vehicle (EV) sector in the long run. Additionally, Aggarwal announced plans to venture into battery energy storage systems (BESS), projecting revenues of approximately ₹1,000 crore from this segment by financial year 2027, which would represent about 22% of its anticipated ₹4,514 crore revenue in fiscal year 2025.
Despite the optimistic outlook for the battery business, analysts remain cautious. One analyst from a global brokerage firm remarked, “Although the battery business guidance appears promising, the road to achieving that is still hazy as there are established players in the segment.” This skepticism is reflected in Ola Electric’s stock performance, which has seen a 24% decline over the past month, contrasting with a 3% increase in the Nifty Auto index.
In the September quarter, Ola Electric reported a narrowed loss of ₹418 crore, down from ₹495 crore a year earlier, but revenue plummeted by 43% to ₹690 crore. The government’s Vahan portal indicated that vehicle registrations nearly halved to 50,372 units, falling behind competitors like Ather Energy Ltd, TVS Motor Co. Ltd, and Bajaj Auto Ltd. Investor sentiment has soured, with Ola Electric’s shares dropping from an initial listing price of ₹76 to around ₹35, while Ather’s shares have surged over 120% since its May listing.
A glimmer of hope for Ola Electric came from its two-wheeler segment, which achieved Ebitda margin profitability for the first time. This was partly due to the company not allocating ₹106 crore in expenses to its auto or cell business, instead categorizing it under unallocated expenses. Ebitda, or earnings before interest, taxes, depreciation, and amortization, is a key metric for assessing profitability.
In response to concerns about the company’s outlook, an Ola Electric spokesperson stated, “FY26 has been a deliberate year of recalibration. We consciously prioritized profitability and sustainable growth over volume-led expansion.” This sentiment echoed Aggarwal’s remarks during the earnings call, as the spokesperson added, “This transition phase includes revamping our front-end retail network, strengthening service delivery, and scaling operations.”
As Ola Electric navigates this challenging landscape, the focus on profitability and strategic growth will be crucial for its future success in the competitive EV market.
**FAQ**
**Q: What is Ola Electric’s strategy for future growth?**
A: Ola Electric aims to prioritize profitability and sustainable growth over volume expansion, with plans to enter the battery energy storage market and improve operational efficiencies.
