Ola Electric Is On Track To Reach Ebitda Breakeven By FY27

PC: The Economic Times 

Ola Electric, the Bengaluru-based electric vehicle maker, would probably be at EBITDA breakeven by March 2027, based on its estimates, Goldman Sachs recently said in a report. The group said to be expecting an astonishing growth trajectory for the company that will grow revenues at 2.5 times its current speed with a fivefold increase in the volume of vehicles over the next three years.

Goldman Sachs is projecting +40% revenue CAGR from FY24 to FY30E, with that trajectory bringing it to breakeven for free cash flow (FCF) in FY30E excluding subsidies, compared to +240% CAGR from FY22 to FY24. The report also has expectations of delivering EBITDA margin and Return on Invested Capital (ROIC) at 11.9% and 27%, respectively, for Ola Electric in FY30E – more than threefold improvement from -19.7% and -32.0% recorded in FY24.

Revenue growth in Ola Electric was modest in FY24 and Q1 of FY25. The company’s revenues from operations increased a meager 2.8% at Rs 1,644 crore in Q1 FY25 from Rs 1,598 crore in Q4 FY24. However, effective losses from Ola Electric has decreased by 16.6% at Rs 347 crore in Q1 FY25. The company had reported revenue of Rs 5,010 crore and loss of Rs 1,584 crore during the previous fiscal year in FY24.

Goldman Sachs has tagged a “buy” rating on Ola Electric with its stock’s target price at Rs 160 for the next year, implying an upside of as much as 50%. At present, shares in Ola Electric are trading at Rs 113 a share. The broker expects huge revenues growth from Ola Electric from FY24 through FY27, one of the best seen by Indian electric two-wheeler makers and ahead of growth projections of some of its peers such as TVS Motor, Bajaj Auto, and Hero MotoCorp.

According to the report, Ola Electric’s offerings indeed have about an 18% cost gap, in terms of cost-to-run, compared with its peers in the EV space. The market share gains are impressive as well-too impressive- gained 49% in Q1 FY25 from 21% in FY23, says Jefferies; although market share had declined to 32% in August with TVS and Bajaj taking 19% each while Ather Energy took 12%.

The EV scene will heat up soon since Ola Electric is ready to launch its motorcycle and electric three-wheeler, or e-rickshaw. Ather Energy also readies itself for a public listing as that time approaches. The energy has announced an expansion into manufacturing its first motorcycle. All this bodes for an interesting competition in innovation in the electric vehicle market.