New Delhi, Oct 23 : Shares of Ola Electric Mobility declined over 6 per cent on Friday after analysts downgraded the stock to sell from neutral and sharply cut its 12-month target price.
In morning trade, the stock was trading at Rs 29.86 -- an intraday low so far -- on the BSE, down as much as 6.5 per cent after opening more than 2 per cent lower at Rs 31.50.
The selling pressure came after analysts at leading brokerage Goldman Sachs cut their target price to Rs 23 from Rs 39.28, citing concerns over cash flow, funding requirements and market share.
The brokerage said Ola Electric's path to sustainable free cash flow generation has become less clear due to high interest costs and capital expenditure requirements across its battery cell and electric two-wheeler businesses.
These requirements come at a time when the company is expected to see an extended period of operating losses at current market share levels, it added.
To meet current capex and interest servicing needs, Ola Electric would need its FY28 to FY30 revenue to be 3.6 times to 7.1 times its FY26 level, according to the analysts.
This compares with a 55 per cent decline in revenue in FY26 over FY24, highlighting the scale of growth required.
Moreover, the brokerage also flagged possible operating challenges in the battery cell business following the recent departure of its head.
It has cut FY27 to FY29 revenue estimates by up to 10 per cent to reflect a more challenging market share environment compared to two-wheeler peers.
Goldman Sachs said it could turn more constructive if a shift towards dealer-led sales and servicing revives the electric two-wheeler business and improves brand sentiment.
The stock has fallen more than 40 per cent in the last 12 months and 16 per cent year-to-date.
In morning trade, the stock was trading at Rs 29.86 -- an intraday low so far -- on the BSE, down as much as 6.5 per cent after opening more than 2 per cent lower at Rs 31.50.
The selling pressure came after analysts at leading brokerage Goldman Sachs cut their target price to Rs 23 from Rs 39.28, citing concerns over cash flow, funding requirements and market share.
The brokerage said Ola Electric's path to sustainable free cash flow generation has become less clear due to high interest costs and capital expenditure requirements across its battery cell and electric two-wheeler businesses.
These requirements come at a time when the company is expected to see an extended period of operating losses at current market share levels, it added.
To meet current capex and interest servicing needs, Ola Electric would need its FY28 to FY30 revenue to be 3.6 times to 7.1 times its FY26 level, according to the analysts.
This compares with a 55 per cent decline in revenue in FY26 over FY24, highlighting the scale of growth required.
Moreover, the brokerage also flagged possible operating challenges in the battery cell business following the recent departure of its head.
It has cut FY27 to FY29 revenue estimates by up to 10 per cent to reflect a more challenging market share environment compared to two-wheeler peers.
Goldman Sachs said it could turn more constructive if a shift towards dealer-led sales and servicing revives the electric two-wheeler business and improves brand sentiment.
The stock has fallen more than 40 per cent in the last 12 months and 16 per cent year-to-date.
