B2C Opportunities: Goldman Sachs and BofA Securities Rate Ola Electric Highly

B2C trends are reshaping the electric vehicle (EV) market, prompting international brokerage firms Goldman Sachs and BofA Securities to initiate coverage on the prominent emobility player, Ola Electric, with a 'buy' rating. Goldman Sachs highlights a robust growth outlook, anticipating Ola Electric will capitalize on structural trends within India's electric two-wheeler landscape.

Despite a notable decline in its bottom line and fluctuations in stock price, Goldman Sachs has set a price target of INR 160 per share, which implies a potential upside of over 48% from its previous close. On the other hand, BofA Securities has also adopted a 'buy' rating with a target of INR 145, signifying a significant opportunity for investors.

Growth Forecasts Indicate Bright Future

Goldman Sachs projects Ola Electric will experience a revenue growth rate 2.5 times faster and a volume growth rate five times quicker than its competitors over the next three years. They predict an impressive annual sales jump of over 40% from FY24 to FY27E, driven by increased penetration of EVs, a leading position in the market, and continuous new product launches.

• Ola Electric's consolidated net loss widened to INR 347 Cr in Q1 FY25, yet operating revenue saw a 32% rise, reaching INR 1,644 Cr.
• In comparison, Goldman Sachs anticipates competitors like TVS, Bajaj, and Hero will see significant but lower revenue growth, with annualized rates of 16%, 19%, and 10% respectively.
• EBITDA breakeven is expected by FY27E, relying on decreasing battery pack prices.

Product Pipeline and Market Leadership

Analysts noted Ola Electric's strong product pipeline, with 14 planned launches compared to only 4 from Honda and 6 from Bajaj Auto. Ola's market leadership is supported by its value proposition and reduced running costs.

However, challenges persist, with total e-scooter registrations declining by 34% MoM to 27,517 units in August. Despite these numbers, Ola Electric maintains a leading position in the EV 2W sector.

Looking ahead, Ola Electric is set to enter the electric three-wheeler market, competing against players like Euler Motors. CEO Aggarwal has confirmed the development of an in-house electric three-wheeler, with plans for future launches.

Market Perception and Future Developments

At Ola Sankalp 2024, new product launches were unveiled, including the Roadster series of e-bikes scheduled for release next year. As analysts remain optimistic regarding the long-term trajectory of Ola Electric, the potential for growth in both two-wheelers and three-wheelers is seen as a significant opportunity in the B2C landscape.