Ola Electric Mobility's Stock Surge Reflects Market Confidence After Expanding into Electric Motorcycles

(Delhi)In a remarkable show of investor confidence, shares of Ola Electric Mobility surged by 16% to ₹128.30 per share in early morning trade today. This rally follows the company's recent foray into the electric motorcycle segment, marking a significant expansion from its established two-wheeler electric scooter market.

On August 15, 2024, at the Sankalp 2024 event held at its Future factory in Krishnagiri, Tamil Nadu, Ola Electric unveiled three new electric motorcycle models: Roadster Pro, Roadster, and Roadster X. Priced at ₹74,999, ₹1,04,999, and ₹1,99,999 respectively, these models aim to capture a significant share of the burgeoning electric vehicle (EV) market. The company also showcased its Bharat 4680 cell and battery pack, the new Gen-3 platform, and MoveOS 5, highlighting its commitment to advancing EV technology.

Bhavish Aggarwal, Founder and CMD of Ola Electric, emphasized the strategic importance of this expansion. "Currently, motorcycles make up two-thirds of India’s two-wheeler market. With Ola’s entry into this segment, the penetration of electric vehicles in the two-wheeler market is set to accelerate even further," he said. Aggarwal expressed confidence that Ola's innovative product lineup will drive greater adoption of EVs in India.

Despite the optimism surrounding its product expansion, Ola Electric reported a consolidated net loss of ₹347 crore for Q1 FY25, a significant increase from the ₹267 crore loss in the same period last year. The loss was attributed to the impact of price reductions on its entry-level scooter models, which were introduced to counteract the reduction in government EV subsidies.

However, the company’s revenue from operations soared to ₹1,644 crore in the June quarter, up from ₹1,243 crore in the corresponding period last year. Ola Electric achieved its highest-ever quarterly deliveries, with 1,25,198 units sold compared to 70,575 units in the previous year. Aggarwal highlighted that Ola’s market share during this period reached a record 49%, solidifying its position as India’s leading electric two-wheeler manufacturer.

In a positive development for investors, HSBC Securities and Capital Markets (India) has initiated coverage on Ola Electric with a target price of ₹140 per share. The global brokerage firm expressed optimism about the company’s domestic production of key EV components, particularly batteries. HSBC's analysis suggests that Ola Electric's strategic focus on localization and its go-to-market strategy could attract investment interest, despite existing challenges such as slow EV adoption, intense competition, and regulatory uncertainties.

HSBC noted that while risks related to battery manufacturing and market dynamics persist, Ola Electric's favorable risk-reward profile could offer potential benefits for investors. The brokerage cited possible reductions in the bill of materials for EVs and decreasing adoption friction as positive factors contributing to this outlook.

As Ola Electric continues to innovate and expand its product offerings, all eyes will be on how effectively it can capitalize on the growing demand for electric motorcycles and navigate the evolving landscape of the Indian EV market.