Ola Electric Mobility gets the boost it needs as HSBC gives it a thumbs up sending its shares through the roof.
Ola Electric Mobility’s shares rose by 20 percent for the week and touched the upper circuit level of Rs 133. 80 after HSBC initiated coverage with a ‘buy’ recommendation. HSBC has commenced coverage with a target price of Rs 140 which implies about 26 percent potential upside to the stock’s prior day closing price.
Table of Contents
Strong Performance Since IPO
Yes for Ola Electric gate since its initial public offer; the firm’s shares have risen by 75 percent. Again, except for an 11% drop from the increased initial offering price of Rs 76. HSBC has given any positive recommendations on Ola Electric and the fact that the company leads the list of brokerage recommendations is noteworthy as most brokerages cut their recommendations due to the issues caused by the COVID-19 pandemic and other factors that adversely affected the EV market in India.
HSBC’s Optimism of the Industry Outlook Isn’t Without Reason
HSBC is still positive on Ola Electric because the firm benefits from sound regulation, proper cost control, and attractive risk-reward when it comes to battery manufacturing. The brokerage emphasized its market leadership in electric two-wheelers by seizing 49% of the market share in Q2 of this fiscal. This pledge to make important EV parts such as batteries within Ola’s home country is considered as a major competitive strength in the rising EV market.
Risks and Challenges Identified
However, HSBC like every other research highlighted that there are risks that may affect the performance of Ola Electric in the future as well. Some of the threats include the slow rate at which electric vehicles are being adopted in the country, rising competition, uncertainty in the regulatory environment, and challenges that cropped up regarding battery production. These factors could slow down growth in the company’s growth path or represent liabilities that have to be managed.
Key long-term growth opportunity for Ola Electric
Nonetheless, HSBC does not lose faith in the long-term perspective that Ola Electric will have within the fashion. The brokerage said that it anticipates the EV manufacturing cost to come down drastically in the financial year 2027-2028 while at the same time, it expects the ICE scooters’ manufacturing to be costlier because of the stringent regulation on emissions. battery venture will also be a hit, as according to HSBC the same offer may allow Ola to start producing batteries for the same price as importing them. This is a potential upside risk to current estimates for Ola, given its potential to achieve cost reductions of between $15-$20 per KWh, thus getting in line with battery cost standards elsewhere in the world.
Financial Performances and New Product Introduction
On the financial front, Ola Electric said it had a net loss of Rs 347 crore in the latest quarter, which was a broader loss than the previous year. However, the company’s EBITDA loss was almost flat with Rs 205 crore this year against Rs 218 crore of last year. Although the figures displayed above, Ola’s shares recovered from the low point of the day and settled 2.6% higher at Rs 111.
This is also after OLA Electric unveiled its intention to enter the electric motorcycle market with the upcoming Roadster series. The new motorcycles, which cost Rs 75,000 to Rs have to meet strict market requirements such as. 5 lakh expected to roll out on Thursday, which will strengthen Ola’s standing in the emerging EV segment.
Conclusion
Ola Electric’s latest results and HSBC’s endorses the firm bullish prognosis demonstrate the company viability in the growing market of electric vehicles. There is still a long way for Ola to go, but the emphasis on new technologies and cost control should allow the company to build a sustainable future ahead; therefore, witnessing Ola’s development can help understand the further outline of the EV segment.
