Broker’s call: Ola Electric (Sell)

Target: ₹20

CMP: ₹28.83

We downgrade Ola Electric Mobility to Sell from Buy and cut our TP by 60 per cent to ₹20 from ₹50.

Ola logged a weak Q3, with revenue down 55 per cent y-o-y on a 61 pcer cent volume drop. Gross margin (GM) rose by 340bps q-o-q to 34.3 per cent, aided by PLI accrual for Gen3. EBITDAM losses expanded to -58 per cent vs -29 per cent in Q2. The underlying E2W theme is strong; the industry is seeing healthy growth (33/24 y-o-y in Jan/Feb-26), with a revival in penetration following a dip due to recent GST cuts.

However, Ola has seen a consistent volume decline to 32k units in Q3 (Q1: 125k) and market-share loss (ranked 5, with 6 per cent share). Ola is undertaking several measures to improve execution (example store rationalisation to 700) and cut costs/conserve cash (guides for ₹250-300 crore/quarter opex vs ₹430 crore in Q3) and improve brand perception amid severe product/service issues (>1 million E2Ws sold since launch).

However, we believe that this could be a difficult, long-drawn process, especially amid greater focus from incumbents and scale-up at Ather. Also, the turnaround would necessitate Ola to have a strong cash balance to survive this phase. However, as per our calculations, Ola has turned net debt as of 9M-FY26 (₹670 crore) from net cash of ₹160 crore in H1FY26.

Upside risk could stem from a strategic stake sale in the battery business, resulting in meaningful cash infusion. We prefer to play the E2W theme with Ather, TVS and Bajaj Auto.

Published on February 16, 2026