Ola Electric - Full Stack EV play?

[gaurav]

Following is a comment on a reddit post about ola 8 months back. I would like to know opinions on this. Below is the link and excerpt:
https://www.reddit.com/r/IndianStreetBets/s/C0fOJDBfzE

You cannot predict stock accurately, you can only predict the value of a stock in long time. At this point, we can only calculate by what they actually have as assets as the company reputation and growth and their product are all very bad.

They had networth of 2000crore pre-IPO. And then in IPO people gave 5500crore to company (and 650crore tip to Bhavesh).

So totally people have put about 7500crore in this company, which can be considered as its worth. We can assume some other company looking to get in this space can buy them out for above this price.

Current market cap is 33000crore. So, it is at 4.4x the worth. It would be good value at Rs17. That is assuming they made all good investments with the money they got, and did not blow up the money. If the servicing requirement increases during warranty, they are going to blow up a lot of those money.

For a startup, growth would have given some boost to the value, but they are going in downward direction there with each month sales declining. And now even common people know the quality of their product.

The leadership and promotor are the worst kind who don’t deserve our attention. Neither do they have govt-influence so they can even lose their subsidies. Plus the promoter is known to create a web of companies to legally suck out money from his own company. OLA Cabs is a different company…though many fools who bought IPO thought they are buying OLA cabs, with so many comments I see of comparison with Uber.

OLA Maps is a different company owned by the CEO. This is done so he can in future charge OLA electric and OLA cabs 100s of crores as royality to use OLA Maps. And that is not even a map he created. It is Openstreetmaps, which is free and opensource.

Similarly their “AI” division - OLA Krutrim is a different company owned by the CEO. If their AI succeeds, the investors of OLA Electric will get NOTHING, instead they will lose money as the CEO will force OLA electric to pay all its profits to OLA Krutrim as fees to use its AI, which is basically he paying himself.

No one should do business with such CEOs who is always looking for personal gains over company gains. Such CEOs will suck the company dry. There is no future with such people. Even if by any miracle OLA become profitable, he will take that profit away from you. So, even if you buy for low stock price, know that he can screw you like this at some point in future. Good companies don’t cheat their own investors with such trickery.

Ambani could have started JIO as a totally separate company thus holding high ownership percentage, and no one would have even questioned it as it is completely different vertical, yet he started it under Reliance industries, thus making every existing shareholder of Reliance Industries a owner of JIO.

The thing is, it was illegal for Reliance to start a telecom business for xx years with their noncompete agreement with Anil Ambani’s Reliance communications after their family partition. But, India’s 4G spectrum auction was going on, and if Mukesh Ambani wanted to start his own Telecom in future, he needed to have the spectrum. A mysterious unlisted small broadband company no one had heard of called Infotel Broadband bought spectrum in all 22 zones in India at that time for some 12000crore outbidding tata, airtel, vodafone, RelianceComm and BSNL. It ended up as the only company to have 20Mhz of spectrum across India.

Later in 2010, within a month of non-compete expiring, Reliance industries bought 95% stake in Infotel for 4800 crore. This went on to become JIO in 2015. Now, shareholders wont even understand what all just happened, but still it ended up benefiting all shareholders. Instead of doing all these, couldn’t Ambani have kept the spectrum license with himself as a private company and let Reliance industries invest in building JIO and then charge a hefty fees to use the spectrum?

A good founder takes everyone who invested in him up with him, while a bad one takes just himself up even at the cost of others. The reason Reliance became so big is also because of this trust that any stupid person with no knowledge of stock or business can invest in Reliance and see it grow big. This is what works in the long term. Ambani had every excuse to start it separately, including the noncompete clause, yet he didn’t, as he understands, investor trust is everything.
OLA Electric also do not control any critical technology and also do not have a loyal fanbase. So, any established company can launch a more reliable product, and all customers will jump to that one. Plus, they don’t even have a product with high profit margin. Ather Energy loses Rs.63,000 on every electric scooter it sells in India. Ola Electric Lost Rs. 75000 For Each Scooter It Sold In FY23. This is the reason established companies have not jumped head first into Electric. They can simply wait till this is a profitable space and then kill off these startups.
Overall this quick launch of IPO at such high prices was a big moneygrab from stupid investors.
Book value is actually Rs11.5 by the way, so 17 is reasonably above that.
So overall, its worth considering only if it dip below 17, otherwise IGNORE. There are many other stocks.

Disc: tracking with no position

[randomquarks]

Find what they wrote about NSE when it was trading in 1500s. Reddit is like that. This post is basically a rant and not analysis. The key to success in stock market is to not be emotional. Ola was overvalued at 76 and is fairly valued at 40. How do you know. Look at the trend in sales and price to sales of other competitors.

While tracking the company, one must read a lot. Yesterday they released the annual report. Go through that. Check the concalls. Infact join and ask any particular questions if you have. Rs. 40 would entitled you to do that.

Don’t believe me or anyone else. Just go by trend in EV market and try to make bull, bear and base cases for next 5-10 years. In my bear case model, it is going to be profitable in FY28. So, one might get opportunity to buy/accumulate for a long time. It would be wise to buy in batches, like an SIP.

By 2030, it should have an EPS of 3-5, giving a fair value of 75+ at least. That would be CAGR of 12-13. So, we have a decent margin of safety at current price.

For CEO, many people will say many things. However, what has he done? He actually created the entire 2WEV category almost single handedly. Execution is superb. Only problem is service quality. It will improve with time. Now we have third party vendors offering parts for Ola, so private service centers would also start servicing and this pressure will reduce in 1-2 years.

[sandeep17]

I would put a EPS of 3-5 by 2030 as a best case scenario. Based on current equity base ( and assuming they dont further dilute ), they would need a bottomline of 2500 Cr by 2030 to hit a EPS of 5. This is where TVS Motor is today and TVS Motor hit a topline of 45K Cr (and by the way, TVS is the market leader as of today even in the EV 2-wheeler space)…Ola is at 4K Cr topline. Long way to go. One should focus on how the balance sheet evolves from here.

[dpk1994]

@dpk1994

Over simplified back of the envelop calculation, just for fun

I believe rather than trying to predict the near future events, we can more precisely forecast the EV adoption trend.

Assumption:

• EV adoption of 50%* by 2030 (as per NITI Aayog’s EV roadmap it could even be 80%)
• Ola’s market share as 25%
• 7% CAGR growth in 2W

Version 2: Over simplified back of the envelop calculation, just for fun

Total 2W sales in India (2025) = 19,5 Million
Assumed Total 2W sales in India (2030) = 27,4 Million
EV 2W sale in 2030 = 13.7 Million (assuming 50% penetration)

Case 1:
EV penetration: 50%

Ola’s market share = 2.74 Million (assuming 20% market share)
Ola’s revenue = 27,400 cr (taking AOV as 1 lacs INR)

For PAT margin, i have taken the PAT margin of Bajaj auto which is 15% (approx). I recon it would be significantly higher than this due the backward integration of Ola.

PAT = 4110 cr
Equity capital = 414 cr
EPS = 9,92 INR

Lets give it a valuation similar to Bajaj, however i believe it would be more as Ola would be a matured technology company with their own gigafactory. PE= 30

Share price at the end of Fy30 = 298 INR (7x from here)

Case 2:
EV penetration: 60%
Hypothesis: At present 80% of the 2W are priced at <1.5lacs, I assume that 80% of these would have been migrated to EV by 2030, as they are used by daily commuters/family man/common man and not those who are speed or high end performance enthusiast.

EV 2W sale in 2030 = 17 Million (assuming 60% penetration)

Ola’s market share = 3.4 Million (assuming 20% market share)
Ola’s revenue = 34,000 cr (taking AOV as 1 lacs INR)

For PAT margin, i have taken the PAT margin of Bajaj auto which is 15% (approx). I recon it would be significantly higher than this due the backward integration of Ola.

PAT = 5100 cr
Equity capital = 414 cr
EPS = 12,32 INR

Lets give it a valuation similar to Bajaj, however i believe it would be more as Ola would be a matured technology company with their own gigafactory.

PE= 30

Share price at the end of Fy30 = 370 INR (9x from here by 2030).

Note: I haven’t included any export opportunities, possibility of more than expected EV penetration; as per Government it should be 80% as at present overall EV penetration is China is circa. 40%.

---

In my opinion companies likes of Ather and Ola who are entirely EV focused will win the EV race. They have intention and hunger to build something meaningful and are not here to catch-up but to lead. Players who are backward integrated would be the one on the winning side. You can see what Tesla and BYD are doing. You must have your own design center, cell manufacturing units and Motor. Seamlessly integrated architecture is the winning card and as of now Ola is the only player that has aced that (let’s say close to the best).

I don’t know what will happen in the very short term (let’s say nobody knows) but when everyone and their dog are disappointed, you see anger and frustration everywhere, that’s the time when you should slowly start accumulating (if you trust the business model).

Don’t compare Ola with TVS or Bajaj, neither on valuation front nor on capability, it’s a different beast all together. You will see such companies popping out from no where and shake the whole market. I am sure you remember what Xiaomi did, we all used to hate their mobile phones, battery explosion, heating were the common issues. Nevertheless, they fuckin shook the whole market and now they are even making EV cars. What I am trying to say is these new age companies have very different mindset, risk appetite, vision and passion.

Just to give you some hints:
Bajaj invested huge amount of money, i guess some 7000 cr to buy KTM on the other hand Ola invested 1600cr in their battery division, 2830cr in their factory. None of the incumbents would have taken such a bet.

So, trust the process and track the company, I reckon Ola has all the rights to be a phenomenally successful MNC that India has long awaited.

Disc.
Invested and biased, do your own research

[randomquarks]

I think this is highly optimistic to say 50% penetration and Ola doing 2 million plus vehicles by 2030.

By their own admission they don’t have capacity beyond 12 lakhs till 2029 and they expect it to be slower.

They just passed a resolution 2 days back to reallocate IPO proceeds from capacity expansion to essentially OpEx and debt reduction.

I recently wrote on X regarding the valuation. Copying it here. In short, I don’t think EPS can be 3-5 by 2030. Still good from my side.

"Ola electric : what can be the targets over next few years?

Note : This is not a recommendation or investment advice. Do not follow this blindly.

Before making any investment, do a proper financial modelling and look at the targets. Your targets will most likely be wrong, but you will learn a lot regardless and this is better than shooting in the dark.

So for Ola electric, I have made some targets based on current situation and future trajectory of EV market and their capacities.

First the survival. Will the company survive? Most likely yes. Yesterday it resolved to use the IPO proceeds in a different manner than originally stated. Now the proceeds will be used to 1. Organic growth initiatives(read rent payment for 4000 stores and advertising). This is a running issue as some stores’ rent has not been paid for months. 2. Other Corporate purposes. 3. Pay off debt upto 395 crores.

They have payment of 650 odd crores coming in 2026 FY, so a significant portion is taken care of. It can also enable them to get more money at better terms. Currently, some of the credit lines are around 13%. Read the notes in AR to get more details.

The rent itself would be around 400 crores for a year. This is a rough estimate and not given anywhere. But I think this is a reasonable assumption. So they cover this and then left a few 100 crores for other growth initiatives.

The sacrifice : expansion of Gigafactory. They already are at 1.4 GWh capacity which is around 12 lakh vehicles. They sell 3-4 lakh a year currently. So, they don’t need more for next 3-4 years and plan to increase capacity after FY27 using internal accruals. That means they hope to turn profitable by FY27.

I think this is sensible and they should be able to survive even if they first turn profitable starting FY28.

Second issue : Service. I think this will improve for 2 reasons : Firstly, newer vehicles should have lesser problems. Secondly, we are at an inflexion point when private service stations will now start to cater to EVs. Specially for those outside warranty. Already third party vendors are selling belts and other parts for Ola. So, that will happen. So, in next 1-2 years, this will no longer be an issue.

Now coming to targets. Ola expects to sell 3.25-3.75 lakh vehicles this FY with 50k as Roadster bikes. I think they might do a bit below this, around 3 lakhs. They already did about 85-90 thousands in 4 months. Festive season should increase sales in September and October and then a bump during new year.

In 3 lakhs, they do a revenue of about 3600 crores. After expenses, interest etc. they may be at a loss of around 1000-1200 crores. This is better than last year of 1735 crores.

In FY 27, I expect the Roadster to sell really good. The reviews are good. They should be able to grow by about 20% for the whole year, doing a revenue of 4200 crores and loss of about 700-750 crores.

FY28 would be the year of Ola. They should be able to do further 20% growth and be profitable for the first time. Not much, but maybe 50-100 crores profit.

FY29 should have EPS of about 2-3 rupees and FY30 around 5 rupees. This is when next phase of expansion should begin. But even at an EPS of 3 rupees in FY30(I prefer to be positively surprised), and a PE of 20-25, it should be 60-75 rupees fair value.

This is a bear case. There are expected to be 2 things by then : Firstly, the margins would be better due to their in house cell technology. Secondly, Battery arm could actually be spun off to unlock value! I think they will at least bring prototypes of 3 and 4w by 2028 and we might see some sales in 2030, but not counting that.

There can be many a slip between cup and the lip. The Roadster, and bikes in general, might not be the success I hope it would be. EV market itself does not grow as expected. In above, I have assumed 20% growth year on year. That would mean about 20-30 lakh vehicles being sold in 2030.( I think this is fairly conservative. It can even be 40-50 lakhs! In that case if Ola keeps the market share of 20% and operates at full capacity, could give EPS of Rs. 7-8!) If it grows slower(unlikely), we shall see problems. Li supply is another concern, at least in medium term. Much will also depend on how well their cells perform. General recession could just kill demand but that won’t likely last 5 years.

All said and done, I think at current prices, Ola is within margin of safety and should not lead to a loss of principle over next 5 years. If everything is great, can even be a multibagger!

Again : This is not investment advice. This is just to clear my own mind and delineate a process for those interested in valuations."

Disc : invested and biased.

[randomquarks]

It seems they are releasing Diamondhead on 15 August, among other things. I expect that they will be able to sell it only in FY27. As of now, even Roadster is not widely available. The numbers of Roadster for FY26 are expected to be less than 50k. But Diamondhead will be a decent addition to portfolio. By all accounts, the design is catchy and specs are better than anything we have seen with a 400 km+ range.

The location of gigafactory for annual event and the “India Inside” tagline also indicates something to do with battery. They were to use own cells from Q2 or Q3. That would be better the gross margins even more.

They have also hired the former Hero PR head for Ola. That is needed to counter all the negativity, but great service and parts availability is needed much more. I see that the service issues have reduced noticeably. However, I foresee at least 2 more quarters of service issues.

On the other hand, now we have service issues being faced in Ather, TVS and Bajaj EVs. It will take some time for the EV ecosystem to mature and reduction in service issues. I suspect a lot of issues are quite small and remain unresolved due to lack of trained service persons. An example would be the “system issue” error.

This month sales of Ola have been bad. TVS and Ather have soared. Bajaj too is lagging. It may partly be due to rainy season but there definitely are other factors. For Ola, I suspect a financial crunch has also arisen and they don’t have enough money for OpEx. I have seen complaints of non-payment of rent and store closures.

They have AGM scheduled on 22 Aug, and IPO proceeds would be available for OpEx after that if the resolution passes by 90% votes(which it should). Once that money is accessed, the sales numbers should see a jump in September month, and that will be helped by festive season too.

In the meanwhile, stock continues to be in a downtrend and has now broken the psychological level of 40 and has been closing below it for last 2 days. There may be a slight jump after 15 August event, but I think any sustained upmove will come only after better results for two continuous quarters.

[randomquarks]

Just finished watching the Ola Sankalp 2025 event. I am relieved that Bhavish did not talk about 3 or 4 wheelers. Overall, I think his focus has returned to things that matter right now. Product portfolio is expanding and Navratri season can see good sales.

Seemed too optimistic on the cell business. Frankly, I too am. How much of that will play out I do not know. No announcement about Gig and Gig+ which I was expecting.

MoveOS6 looks fine and I am particularly intrigued by the self driving thing they mentioned. Not sure how safe this is right now. I hope they delay it sufficiently to make the release free from bugs.

There was lot of hype about Diamondhead but I am honestly skeptical about it. Thankfully, I don’t have to think about it for another 2-3 years.

The nationalistic fervor is good for hype, but must be combined with removal of service issues.

About powertrain, happy about Ferrite motors though not convinced that they can give same power output. Let us see when they release Gen 4.

The dependence on China will remain for Lithium though. I am not sure what can be done about it.

Just one more thing, which I will perhaps write to them about - they should collaborate with YT channels etc to tell about how to repair the vehicles. There is no other way towards mass adoption. Mass adoption needs mass shift of repair shops towards EVs. That will happen only though YT. Maybe a few crores here can make an outsized impact on sales. I will write about this to the company too.

Disc : invested at 40-42 levels and positively biased.

[Deven]

https://www.moneycontrol.com/news/business/markets/here-is-what-samir-arora-backed-helios-mf-bought-and-sold-during-the-month-of-july-13426060.html?utm_source=chatgpt.com

Ola Electric Mobility
The fund (Helios) initiated a new position with 133.08 lakh shares worth Rs 54.97 crore (1.48% of AUM).

Disc: Invested at higher level, in losses and views are biased due to my holdings.

[randomquarks]

Helios made good money buying Zomato in 50s. Not only Helios, but others too bought last month including Baroda BNP Paribus and Bandhan MF. Others continue to hold.

The margin expansion after start of battery integration will attract more, specially if sales are good this festival season. Let us see if they are able to do as they said in Q2. So far though, I haven’t seen any uptick in sales.

[tarunks9]

[Amit_Dubey]

Attended Sankalp Event 2025 in Tamilnadu, experience was good.
Major announcement included.

1)4680 Bharat Cell, India’s first indigenously developed Lithium-ion cell into its vehicles. This may increase margin going forward.
2) All-new S1 Pro Sport with 5.2kWh and 4kWh battery
packs powered by the 4680 Bharat Cell, starting at an introductory price of ₹1,49,999, with deliveries starting in January 2026.
3) 4680 Bharat Cell integrated in vehicles starting with S1 Pro+ 5.2 kWh and Roadster X+ 9.1 kWh priced at ₹1,69,999 and ₹1,89,999 respectively. Both products are available with an additional ₹10,000 off till 17th August. Deliveries start this Navratri!
4)Indigenously developed ferrite motor that uses no rare-earth
magnets, creating complete supply chain independence. It will be deployed in its vehicle starting Q3 FY26 in a phased manner.
5) Announced its modular Gen 4 platform that will support the next generation of company’s 2W,3W, and 4W.
6) Releases AI powered MoveOS 6 at सं कल्प 2025 with 25+ features.
7) Diamondhead. A bike of the future that will feature many world firsts including a hub-centred steering and its own custom silicon. Targeted to launch in CY27 under price of ₹5,00,000

[Amit_Dubey]

Bhavish Agarwal is a showman, he made a grave mistake by bombing it’s product in the market without creating a service ecosystem. He gained market share , but received a negative review for after sales service.

It will take a lot of effort to change the perception, all though i feel GIGA Factory which has started production of Cell for multipurpose use will benefit the company in the long run .

Dont just ignore the company , take a deep dive .

[RocketMan]

Markets will realize sooner or later, that OLA will become a platform play.

With vertical integration, he can introduce products faster into market than anyone else.

https://www.ndtv.com/auto/ola-electric-car-rickshaw-lcv-teased-all-to-be-based-on-gen-4-platform-9113572?s=09

[Investor_No_1]

@RocketMan

that OLA will become a platform play.

Can you pls elaborate what do you mean by platform play

[Saurabh_Agrawal]

Does anyone know if this 4680 battery cells can be used to make battery packs for cars? For eg: Mahindra imports battery cells from BYD China and then makes its own battery packs, so can this 4680 cell replace that?

[randomquarks]

Cells can be used anywhere. But currently they have no capacity to do it for themselves, let alone others. Yields are low and capacity installed is low. That can happen only after 2030, if everything turns out all right. There too, cells are low margin business. Not much profit without huge scale.

[RocketMan]

Sir, please have a look at this factory tour interview: https://youtu.be/o0FrAyazgdY?si=eMmrZQOl7qG7um9d

Bhavish explains that OLA is unlike traditional automotive business, but more of a mobility platform. The idea is to vertically integrate hardware and in-house software into a single stack that can be applied across multiple mobility devices i.e. 2-wheelers, 3-wheelers, 4-wheelers, and in the future, even drones and robots.

Once this core stack is ready, the assembly line requires very few changes to produce different products or even multiple variants of the same product. This is what fundamentally sets an EV company apart from an ICE company. EVs have far fewer moving parts, which makes the whole system much more adaptable & iterations can be made faster.

You can call this Gen 3, Gen 4, or Gen 5 etc.

All those cribbing about service issues don’t really understand how technology works. I have a TVS Scooty, whenever something goes wrong, I go to the service station, tell the mechanic, and if the part is available, he fixes it. If not, he just places an order.

Now imagine you’re running backend operations at TVS. You have zero data about the scooter this order came from, how much it has been driven, the health of other components, whether the issue has happened before with the same customer, or if a certain region is facing recurring problems (maybe due to weather or terrain). You’re completely blind. All you can do is manufacture or procure the part and deliver it.

Now, in the case of OLA (and other strong EV players), it’s completely different. Every vehicle is IoT-enabled, batteries have a Battery Management System (BMS), motors run on an MMS, vehicles have a VMS, and everything is tied together with an OS. All of this is constantly generating massive amounts of data.

On top of that data, algorithms can run to track exactly which scooter/bike/drone, from which area, of which batch, manufactured on which date, is facing what kind of issue. The number of iterations and improvements possible here is unimaginable. Every single day, the system gets better. It compounds, something ICE companies aren’t even close to being prepared for.

If OLA’s service quality today is, say, 20/100, and it’s improving at 40–50% YoY, then I don’t need to spell you out where this ends up a decade from now.

On price, it’s impossible to predict, markets will do what markets do. But the company hasn’t even unlocked 1% of its potential yet.

As for risks, there are plenty. The biggest ones are technological risk and execution risk.
Those will ultimately decide how far the company can go.

[nil_71]

For a cos like Ola, simple things will matter, It should have a good product, that customers will pay for with zero/near zero complaints, it does not matter, what’s tech , it’s using..it should focus on Process , Org or People mgmt ( ola has some serious complaints on people mgmt, one can talk to any ex-ola guy about the culture), Knowledge management ( that will be reflected in Customer Satisfaction) , Tech . Performance ( that’s the outcome), the last is the result of 1st 4.. These are all fundametals to any org..Bajaj, TVS, Ola…anyone

Whoever can master it better, execute well, with less of ‘Noise’ and more on the ground, will come out as winner..eg TVS, Bajaj which are eating all the mkt share of Ola now..

[The_Seeker]

Not to mention it is a very capex heavy business too!

Thankfully Bhavish has scaled back his ambitions for now on battery business. Its good to see they bringing some focus back on basic unit economics. Could be pressure from the market or big investors. Eitherways its good to see them recalibrate their plans.

[randomquarks]

Yes. Refocus on unit economics is one of the main things that led me bet on this. As for battery, there can be no estimation of its value due to various reasons. Unless we have a really secure Lithium supply, all the tech and scale will not avert risk. I am hoping that does happen within 5-7 years. My sense is that he will spin off battery business to scale it further. There is no other way he can get enough capital to expand to 100 GWh. That should require about 25000 crores in 2030. Until he comes with an funding rounds+IPO for battery raising 10k crores and takes on debt of another 10k crores at low rates(or some combination), it is impossible to fund it. Internal accurals and cash flows can fund maybe 5k crore over next 7 years. That too is contingent on getting profitable by 2028.