Goldman Sachs and BofA initiate 'buy' calls on Ola Electric Mobility; see over 48% potential gains

Ola Electric share price: Shares of the electric mobility major Ola Electric Mobility are in focus in Tuesday's session (September 17) as two major global brokerages initiated their buy calls on the stock. The stock after a muted lising just over a month back saw significant gains and scaled levels of Rs 157.53 on August 20 but thereafter has been largely trading in a range.

In the previous session, Ola Electric in a listless market lost over 3 per cent and settled at Rs 107.65 apiece on the BSE.

Why brokerages are bullish on Ola Electric?

Goldman Sachs has initiated a buy call on the stock implying substantial gains of over 48 per cent from the previous day's close. Giving a bullish call on the stock, Goldman Sachs Ola is the country's leading Electric 2W company with 32 per cent market share as on August 1, 2024. We view OLAE as positively levered to long term structural trends in India's E2W markets despite debates around in-house in-house battery cell manufacturing.

D2C or Direct to consumer sales and after-sales model, upcoming launches by incumbents and FCF breakeven journey will serve as key drivers of volatility for the stock in the coming year, it added. 

The brokerage expects FY24 to FY30E revenue growth of +40% CAGR (vs FY22 to FY24 of +240%), implying FCF breakeven (ex-subsidies) in FY30E Expect to achieve 11.9 per cent/27 per cent EBITDA margin / ROIC by FY30E vs -19.7 per cent / -32 per cent in FY24.

BofA Securities also on the sidelines has initated a buy call on the stock for a target of Rs 145, implying gains to the tune of 34 per cent from the last close. The brokerage stated that the company is the largest E-2W with 40 per cent share (YTD CY24).

The brokerage foreseeing a better adoption rate of EVs in India said that while the current adoption rate of 2W EVs in India is currently at 6.5 per cent it is estimated to rise to 18 per cent by FY28 and 25 per cent by FY30 in 2Ws. Technology and cost leadership puts the company in a win-win situation.