Ola Electric stock: HSBC says market share loss worrisome but retains target price

Foreign brokerage HSBC, which last month initiated coverage on Ola Electric Mobility Ltd with a 'Buy' rating, has reportedly said that the recent market share loss at Ola Electric is worrisome, as it suspects that the development could be due to the ramp-up of low cost variants from competition. While the brokerage retained its 'Buy' rating and a target price of Rs 140 on the stock, there could be 15-20 per cent downside risk to volume estimates for FY25 and FY26 if such a market trend sustains, said a CNBC TV18 post on X quoting the brokerage as saying.

HSBC had on August 15 initiated coverage on Ola Electric, saying Ola Electric was worth investing in despite its conservative view on EV penetration in India along with other uncertainties. Slower penetration of e2Ws and battery plant issues are key downside risks, it said last month.

It had cited many concerns including low EV penetration and competition that it said looks set to remain intense, especially from incumbents. Besides, it had raised concern over the uncertain regulatory support and battery manufacturing risks.

The HSBC report came two days after Ambit Capital initiated coverage on the Ola Electric stock with a 'Sell' rating.

Ambit Capital said Ola Electric deserves a premium for wider coverage of the e-2W value chain. But it expects Ola's market share to decline to 25 per cent by FY31 against 42.4 per cent at present.

"Ask rate at CMP for volume growth (reverse DCF) implies 36.3 per cent CAGR over FY24-35E, which is slightly higher than our estimate of 34.5 per cent, leaving low margin of safety against the risks mentioned above. Target price of Rs 99.6 (Sep’25 SOTP) implies FY26E EV/sales of 4.3 times vs median EV/sales for global EV Co of 1.8 times and 3 times for India 2W OEMs. Risks to our call: a) faster-than-expected EV penetration, b) substantial success to OLAELEC’s e-motorcycle and c) faster scale-up of cell plant," it said.