Goldman Sachs has downgraded Ola Electric Mobility to a Sell rating, citing mounting concerns over cash flow, funding requirements, and operational challenges. The investment bank slashed its target price to ₹23 from ₹39.28, implying a 23% downside from the previous closing price of ₹29.93. Goldman Sachs also reduced its revenue estimates for FY27 to FY29 by up to 10%, pointing to a tougher market-share environment and prolonged operating losses.
The downgrade reflects growing worries about Ola Electric’s growth prospects and financial sustainability. Goldman Sachs noted that the company needs a substantial revenue acceleration to cover capital expenditure and interest servicing requirements. Revenue during FY28 to FY30 would need to reach 3.6 times to 7.1 times FY26 levels to meet these obligations. The brokerage also highlighted operational headwinds following the recent departure of the head of Ola Electric’s battery business.
Despite its cautious outlook, Goldman Sachs identified potential recovery factors. A turnaround in the electric two-wheeler business, faster customer acquisition for in-house battery cells, and improved profitability in the cell business could help restore brand sentiment. However, the need to invest in both electric scooters and battery manufacturing, alongside high interest costs, remains a significant hurdle.
Earlier this month, Ola Electric finalized a ₹1,000-crore rights issue at ₹27 per share, a 26% discount to its market value. The company also raised ₹780 crore through a qualified institutional placement in June. In Q1 FY27, Ola Electric narrowed its net loss to ₹336 crore from ₹428 crore a year earlier, though revenue declined 45% year-on-year to ₹455 crore.