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On Friday, Kotak analysts issued a downgrade for Ola Electric (OLAELEC:IN) shares, moving the rating from Reduce to Sell with a new price target set at INR30.00, a significant decrease from the previous INR50.00. The revision followed the company’s reported fourth-quarter financial results for the fiscal year 2025, which revealed a larger-than-expected EBITDA (earnings before interest, taxes, depreciation, and amortization) loss.
Ola Electric’s financial performance was notably impacted by increased warranty provisions and lower sales volumes. This led to a free cash flow (FCF) outflow of INR35 billion for the fiscal year 2025. Kotak analysts anticipate that the company will continue to experience EBITDA losses due to diminishing brand equity and a more competitive market environment.
The analysts highlighted that the future success of Ola Electric is contingent on its ability to increase production volumes and successfully enter the motorcycle market. However, they expressed concerns regarding the company’s executive challenges and credibility issues, which may hinder these efforts.
In their report, Kotak analysts remarked on the fourth-quarter results, stating, "Ola Electric’s 4QFY25 EBITDA loss came in much above our expectations, driven by higher warranty provision and weaker volume print." They further elaborated on the downgrade decision, explaining, "We expect EBITDA losses to continue amid weakening brand equity and increased competitive intensity. Ola Electric’s future hinges on scaling up volumes and successful motorcycle foray, which faces executive and credibility challenges."
The new fair value (FV) of INR30, down from INR50, reflects Kotak’s adjusted outlook for Ola Electric’s stock, taking into account the recent financial outcomes and the strategic obstacles the company faces.
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