Speed machine! Ola Electric shares jump another 10% today, up 92% from IPO issue price
The rally, taking both long-term investors and positional traders by surprise, has catapulted the stock beyond HSBC’s target price of Rs 140. The global brokerage firm had last Thursday initiated coverage on Ola Electric saying that the stock is worth investing given sustained regulatory support, Ola’s ability to reduce costs, and a positive risk-reward in its battery venture.
“We use a DCF methodology to value Ola Electric. We use a WACC of 10.0% and a long-term growth rate of 7.5%. Our target price implies FY28e price/sales of 2.9x and an EV/EBITDA of 39x. We also provide sensitivity matrix to gauge the sensitivity of Ola’s valuation to different parameters. On ESG, Ola’s Future factory is all women with capacity for 20,000 employees,” said HSBC’s Yogesh Aggarwal.
HSBC said its investment thesis in Ola depends on four key forces: the EV penetration curve in India, Ola’s market share and competitive intensity, regulatory evolution and government support, and the success or failure of Ola’s battery manufacturing unit.
“We believe in the near-term (12-24 months) – regulatory support will remain intact and hence Ola will attempt to maximise volumes in the near-term. Higher volumes mean better operating leverage and hence means Ola is better able to absorb an eventual reduction in regulatory support,” the brokerage said.Reading the charts is also tough for technical analysts at this stage as the stock was listed on exchanges just a few days ago on August 9. Volume patterns, however, suggest that the stock could be in the overbought zone.”Daily volumes have been on the decline since the first day, while intraday volumes are also seen tapering through the day. This does not suggest a FOMO trade. But we do see signs of positional trades being built systematically,” Anand James, Chief Market Strategist, Geojit Financial Services, told ETMarkets.In the June quarter, the company reported a 32% YoY jump in revenue, however, the loss for the quarter widened to Rs 347 crore from a loss of Rs 267 crore in the corresponding quarter of the previous year.
Last week, with the launch of Roadster, Roadster X and Roadster Pro, the company also entered the electric motorcycle segment and further announced the integration of its cells in its own vehicles starting Q1 FY26.
