Ola Electric Reports INR 428 Crore Loss in Q1, Up 23% YoY

On Monday, July 14, Ola Electric, a manufacturer of electric two-wheelers, reported a consolidated net loss of ₹428 crore for the first quarter of the financial year 2025-26 (Q1 FY26).  A year prior, the company, led by Bhavish Aggarwal, had reported a net loss of ₹347 crore for the same period.

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Nonetheless, in terms of quarter-on-quarter (QoQ) performance, the loss decreased from ₹870 crore recorded at the conclusion of FY25’s March quarter.

During the June quarter, consolidated operational revenue fell 49.6% year-on-year (YoY) to ₹828 crore, as sales were adversely affected by intense competition.  In the corresponding period of the previous fiscal year, Ola Electric’s reported revenue was ₹1,644 crore.  Nonetheless, the performance improved in a sequential manner.  In the quarter ending March 2025, the company reported revenue of ₹611 crore.

Sales during the period under review plummeted due to intense competition from other players such as Bajaj Auto, TVS Motor, and Ather Energy.  In the June quarter of FY26, the company delivered 68,192 units, compared to 1,25,198 units in the same period last year.

In terms of operations, Ola Electric reported an EBITDA loss of ₹237 crore in Q1 FY26, which is greater than the ₹205 crore loss recorded in Q1 FY25.  The margins were -28.6%, in contrast to -12.5%.

The auto segment’s EBITDA saw a significant improvement to -11.6%, up from -90.6% in Q4 FY25, and June was the first month in which the auto business recorded a positive EBITDA.

The gross margin improved to 25.8% from 18.4% on a year-over-year basis.

Our best GM performance to date has been fueled by the reduction of the Gen 3 BOM due to our emphasis on vertical integration and in-house technology, and this trend is expected to persist over the coming quarters.  Ola stated in a letter to shareholders, “Our exit target for FY26 is to achieve a GM of 35-40% with PLI benefits, which will amount to approximately ₹40,000 – ₹45,000 per vehicle.”

Project Lakshya, the company’s cost optimisation initiative, has resulted in considerable operational efficiencies, cutting auto opex from ₹178 crore to ₹105 crore on a monthly basis.  As per a press release following the earnings announcement, consolidated opex currently amounts to ₹150 crore per month, with a target of reducing it to approximately ₹130 crore/month by FY26.

Ola aims to sell 325,000 to 375,000 vehicles and generate revenue ranging from ₹4,200 crore to ₹4,700 crore.

The company stated that with the initiation of Production Linked Incentive (PLI) benefits for the Gen 3 product portfolio starting in Q2, gross margin is expected to increase to 35% – 40%, and full-year auto EBITDA is anticipated to exceed 5%.  Ola mentioned, “The company expects the auto business to continue being EBITDA positive from Q2 onwards.”

Ola Electric’s share price sank to a new low of ₹39.58 in advance of the announcement regarding first-quarter earnings for the period ending June 2025.  The stock, however, soon bounced back and surged 17.8% in intraday trading, aided by the strong sequential performance and the positive turning of EBITDA in the auto business.

Anshul Jain, Head of Research at Lakshmishree Investments, commented on the Ola Electric stock, noting that the EV stock has broken below its previous all-time low of 45 and is now hovering around the 40 mark, showing clear signs of weakness on the charts.

Given the existing price structure and absence of strong buying sentiment, it appears that there is greater downside risk. If weakness continues, a test of the 34 level seems more probable.  In order for a meaningful reversal or sustainable bounce to occur, the stock must decisively close above 45 on a weekly basis, which does not seem likely given the current situation.  He advised, “Investors should remain cautious and refrain from new long positions until then.”