At this price point Ola is still priced at 6 times sales vs 2.5xsales for hero motors and 2.5xsales for TVS both of whom are in the EV space and the latter being a strong player in ICE scooter too.
So before thinking if current price is attractive for Ola, one should ask the following:
1- Why should Ola trade at higher price multiple compared to other bigger and better players who are gaining market share at expense of Ola?
2- Are other vendors getting ICV discount or Ola is getting EV premium? Although there is nothing to suggest either, but for the sake of argument if that were the case I see better value unlocking from buying something like Hero or even TVS. If that’s not the case why would Ola not correct to Industry’s average mean multiples considering that they really don’t have any differentiators over the other player?
I cautioned people about not getting into Ola at 115 in August this year, even when it was getting upgrades from brokerages. I would still caution even when it’s corrected 50% from the top. It’s better to wait and watch and see how the company executes, even if it means giving up a few percentages points on potential up move.
Sooner or later Indian Consumers will realise about the bad customer service and un-reliable products if management really don’t take care of it. Hence, will cause a disaster in the business of Ola Electric.
In my personal opinion, OLA Electric remains a very interesting company to watch out for - They have rapidly built scale (factory capacity, store footprint, battery plant), work at speed and with agility and have sky high ambitions. However these same advantages are currently becoming Achilles heel as products are rapidly iterated, rushed through the market thereby increasing chances of high failure rate, customer dissatisfaction and all sort of problems.
I am observing it from a distance without any like or dislike. At some stage if the products become stable and more reliable then tide will turn very fast for this company. If and when will it happen, I have no clue.
Meanwhile I am keeping a keen eye on the price…if the correction continues, at some point it will become a attractive buy. The risk reward then would become favorable enabling a risky but highly desirable asymmetric bet. Again, If and when it will happen I have no clue.
Till then, happy to observe from a distance without any likes or dislikes.
Feedback from customers on ground is very poor for OLA bikes. If anyone has heard a different view then please share. In my limited understanding OLA is more focussed on sales and not on service.
I am an Ola customer, and initially, I faced several issues with the vehicle. I even had to restart it daily. Eventually, I decided to turn off all the tech features, and surprisingly, this resolved 99% of the problems. By doing so, I could ride it like a normal vehicle. This clearly shows that the technology needs significant improvement. While I don’t think it’s a major issue, but the company must act proactively and listen to customer feedback to enhance the overall experience.
Thanks Vivek for sharing your experience. The same conclusions are drawn from the report, major issues are with software, shared in the same thread by me in past.
Recently I also asked Zomato driver who delivered in OLA. He says issues are there and said “mai software update nahi karta”. If you don’t update software there is no issue. When asked if he would recommend the scooter to others, on this he said he purchased ola recently for his brother. I said you faced such issues than why, he replied as this is cheapest.
We need to understand, that EV is the technology recently invented vs ICE which is matured and in practice since long. Boy in my neighborhood faced battery issue in chetak, within 4-5 months of purchase, bajaj had to replace it with new one.
OLA is the lowest-cost producer due to its in-house manufacturing of key components, including batteries. If OLA bleed than other bleed at much higher rate. The same can be seen current results of incumbent. Even with low cost OLA can be breakeven or profitable which is extremely challenging for others.
I’m sorry but the other companies (traditional ones) already have huge cash pile with them so it won’t be a big issue.
Also people are already aware about ola niggles through social media, it would be difficult for them to grow at the pace they were already growing at.
Also the major deal breaker I see is with the management. If you have seen Bhavish’s recent stunt with the comedian on twitter you would get a good idea about the founders priority.
However for some reasons I still believe in catching a company with bad management having tail winds over a good management with head winds( absence of growth).
At the end of the day, only numbers in terms of bottom.line and top line would matter.
The question is if the company delivers that all this noise with subside , but a million dollar question again is, will they grow and maintain market share as the transition picks pace from combustion to Ev.
The pace at which ola scaled leads to such service issues. Even management admitted that the service capabilities didn’t grow in line with production and distribution. The problem is the industry they are playing in. 1st it’s capital intensive. I agree that this forms as entry barrier. But at the same time the capital requirements might lead to continuos rising of capital which inturn leads to shareholders value dilution. As we know they will only survive if they retain market share but this inturn leads to continuos capital requirements. They attaining decent profitability in such a competitive industry will not be a normal feat. And coming to r&d looking at attrition and easy availability of tech everyone wants to play ev theme. Will they be the lone survivor and dominant player like indigo or airtel(I don’t know). Let’s be frank, this is purely founder play according to me. Agree it or not Bhavish is one of the few passionate enterpreneurs that India has ever produced. Not comparing him with Elon but the guy is passionate!! But businesses don’t work on just passion. I want this company to succeed. But the deep pocket and reputed competition(existing players and new players like aether), bad reputation, easy entry in ev segments all may hamper his vision. In automobile sector valuation of the company plays crucial role especially for rising capital in future. If market perception is not good, value erosion will be that much faster.
Disc: have small tracking portion in ola. But completely respect the man behind ola.( Happy to take counter argument. Here to learn:))
I look at it a bit differently, right now passion is driving the dreams so its all fun. Fact - Competition has deeper pockets but then also they are less agile as they have reputation, brand image and most important shareholders to answer. This is where a start-up with no baggage gets advantage. In long run there is always a tie up option where a foreign player with good technology or brand presence may buy a stake. So its a win win for the founders anyways. Look at Flipkart, Jio and other such examples all have sold stakes and re-invested to other ventures. I am excited for Ola electric but at same time numbers are not reflecting the same for shareholders interest right now. So waiting an watching …may buy the wave…
This is not an OLA scooter; if it were, the name would have been mentioned in the headline. It’s an Ather scooter, priced at ₹1.8 lakh. Aether give impression that they are known for customer service.
Not to mock anyone, just indicated in my past post, With emerging technologies, occasional challenges or errors are part of the journey toward perfection. Such incidents serve as learning opportunities, helping refine and improve the system over time.
This guy knows how to scale😅. One thing is for sure, as long as bhavish is present ola investors are in for a ride. He is never short of ideas, so surprises are bound to come.This can be a great wealth creator or just another failed company in a list of many. But rooting for him to succeed.
Not necessarily…company is still loss making with profits not in sight as of now…further it is loosing market share to its deep pocketed rivals…so additional stores may not be very beneficial from PnL perspective…
