Ola Electric: On September 25, Indian equity markets opened flat, with the Sensex and Nifty 50 taking a breather after hitting record highs for four consecutive sessions. The benchmarks reflected mixed global cues, signaling a cautious start for investors. As of 9:30 AM IST, the Sensex dipped marginally by 4 points, or 0.01%, to 84,909, while the Nifty 50 slipped by 0.4 points to 25,940.
Market Sentiment and Performance
Market breadth showed a balanced sentiment, with 1,730 stocks advancing, 1,115 stocks declining, and 108 shares remaining unchanged. Key sectors including IT, FMCG, and energy witnessed declines, while metal stocks remained strong, buoyed by recent stimulus measures from China aimed at reviving its economy.
Top Gainers and Losers
Leading gainers in the Nifty included Power Grid Corporation, Hindalco Industries, Tata Steel, Adani Enterprises, and JSW Steel. On the other hand, major decliners were Wipro, HCL Technologies, Shriram Finance, Bajaj Auto, and LTIMindtree.
Ola Electric and Delta Corp Shine
Ola Electric Mobility surged by over 3%, trading at ₹107.5, after a favorable report from Bernstein. The brokerage emphasized the company’s leadership in the electric two-wheeler (E-2W) segment, citing strong growth potential and improving EBITDA margins. Ola’s government subsidies, like the PLI (Production-Linked Incentive) and FAME (Faster Adoption and Manufacturing of Electric Vehicles) schemes, have been instrumental in enhancing its financial position.
Delta Corp also saw a significant rally, with its stock soaring over 8%. This came after the announcement of plans to demerge its hospitality and real estate divisions into a new entity, Delta Penland Private Limited (DPPL). The move is aimed at unlocking value and boosting growth opportunities for both sectors.
EaseMyTrip Declines After Block Deal
Conversely, EaseMyTrip shares fell by over 6%, trading at ₹38.48. The decline followed a block deal where promoters sold a 2.6% stake valued at ₹176.5 crore. Approximately 4.6 crore shares were exchanged at a slight discount, reflecting ongoing volatility in the travel sector.
Metal Stocks Gain on Global Cues
Metal stocks, such as Tata Steel, Hindalco, and JSW Steel, continued to climb, driven by stimulus measures from China, which aim to revitalize the country’s economy, a key market for metals.
Ola Electric’s Competitive Edge: Bernstein Report
A recent Bernstein report highlighted Ola Electric’s dominance in the electric two-wheeler market, particularly noting its superior gross margins and progress toward EBITDA-level profitability. In the first quarter of FY25, Ola Electric reported a gross margin of 18.4%, outperforming its rivals: TVS (14%), Bajaj (12.3%), and Ather (7%).
Interestingly, Ola achieved these margins despite its average consumer price being 10-25% lower than competitors. The company also posted an EBITDA margin of -2%, a significant improvement compared to TVS (-7.9%), Bajaj (-10.4%), and Ather (-37%). Bernstein attributed Ola’s success to its strong localization and vertical integration strategy, coupled with a direct-to-consumer (D2C) model, which minimizes revenue leakage.
Ola’s Investment Appeal Over Competitors
Ola Electric’s stronger EBITDA performance, compared to TVS Motor and Bajaj Auto, is due to multiple factors:
- Eligibility for both PLI and FAME subsidies.
- Higher localization of production.
- Greater in-house component manufacturing.
- Avoiding revenue loss through its D2C model.
- Better scale in the EV market, giving it increased bargaining power.
Outlook for TVS and Bajaj
While TVS Motors revealed that its electric vehicle division reported an EBITDA loss of 7.5%, the company expects profitability after receiving PLI benefits. In contrast, Bajaj Auto faces higher costs due to outsourcing critical components like motors and battery packs, in addition to using a full-metal body for its Chetak electric scooter, unlike its competitors’ fiber bodies.
Bullish Outlook from Global Analysts
Other major players like Goldman Sachs and Bank of America have also expressed confidence in Ola Electric’s growth prospects, assigning a ‘buy’ rating. Goldman Sachs projects that Ola will reach EBITDA breakeven by FY27, with revenue growth exceeding a 40% CAGR from FY24 to FY30. Bank of America emphasized Ola’s cost leadership and technological prowess as primary drivers of long-term success.