Bengaluru-based electric vehicle (EV) manufacturer, Ola Electric, is forecasted to achieve EBITDA breakeven by the fiscal year ending March 2027, as per a recent report from Goldman Sachs. The company, recognized for its fast-paced expansion in the EV market, is projected to experience substantial revenue growth and vehicle volume increases in the coming years.
Key Financial Projections:
- Revenue Growth: Ola Electric’s revenue is expected to expand at a compound annual growth rate (CAGR) of 40% from FY24 to FY30, with vehicle volume anticipated to grow fivefold.
- EBITDA & ROIC: By FY30, the company aims to attain an 11.9% EBITDA margin and a 27% return on invested capital (ROIC), contrasting with its current negative margins of -19.7% EBITDA and -32% ROIC in FY24.
- Free Cash Flow: Free cash flow (FCF) breakeven, excluding subsidies, is forecasted by FY30.
In Q1 FY25, Ola Electric’s revenue from operations rose slightly by 2.8%, reaching ₹1,644 crore, up from ₹1,598 crore in the prior quarter. Despite the moderate revenue increase, the company successfully reduced its losses by 16.6%, posting a ₹347 crore loss. For the entire FY24, Ola Electric recorded ₹5,010 crore in revenue and a loss of ₹1,584 crore.
Goldman Sachs has assigned a “buy” rating for Ola Electric, setting a 12-month target price of ₹160 per share, indicating a potential upside of 50% from its current price of ₹113 per share. The report anticipates that Ola Electric’s revenue growth will outpace its competitors, including TVS Motor (16% projected growth), Bajaj Auto (19%), and Hero MotoCorp (10%).
Ola Electric’s market share jumped from 21% in FY23 to 49% in Q1 FY25, but it recently dropped to 32% as of August. Meanwhile, TVS and Bajaj each held a 19% share, and Ather Energy claimed 12%.
As competition heats up in the EV sector, Ola Electric plans to launch a motorcycle and electric three-wheeler (e-rickshaw) in the coming months. Ather Energy is also ramping up its presence, with motorcycle production in the pipeline and preparations for a public listing.
Summary:
- Ola Electric is expected to achieve EBITDA breakeven by FY27, with a projected 40% revenue CAGR and fivefold increase in vehicle volume by FY30.
- The company’s market share reached 49% in Q1 FY25 but dropped to 32% in August; competitors TVS and Bajaj held 19%, and Ather Energy had 12%.
- Goldman Sachs projects a 50% stock upside for Ola Electric, with a 12-month target price of ₹160 per share, outperforming competitors TVS Motor, Bajaj Auto, and Hero MotoCorp.