Ola Electric Mobility’s share price saw a significant boost, rising by 10% to hit the upper circuit at ₹118.36 on September 17, 2024. The surge comes after major global brokerages, Goldman Sachs and Bank of America (BofA), initiated coverage on the stock with strong ‘buy’ recommendations, projecting substantial upside for the company in the rapidly growing electric two-wheeler market.
Positive Growth Outlook Drives Bullish Calls
Goldman Sachs has set a price target of ₹160 per share for Ola Electric, indicating a potential 35% upside from the current market price. BofA is slightly more conservative with its target price of ₹145 per share, implying a 22% upside. Both brokerages cited Ola Electric’s strong positioning and future growth prospects in the electric vehicle (EV) market as key reasons for their optimistic outlook.
Goldman Sachs: Long-Term Growth Prospects
Goldman Sachs highlighted that Ola Electric is well-positioned to capitalize on India’s growing demand for electric two-wheelers, benefitting from long-term structural trends. The brokerage estimates that Ola Electric could achieve EBITDA breakeven by FY27, driven by projected revenue growth of over 40% CAGR between FY24 and FY30.
By FY30, Goldman expects Ola Electric to achieve an EBITDA margin of 12% and a return on invested capital (ROIC) of 27%. The brokerage also forecasts free cash flow breakeven by FY30, adding that the company’s robust financial outlook makes it an attractive investment opportunity.
BofA: Technology and Cost Leadership to Propel Growth
Bank of America shared a similarly bullish view on Ola Electric, highlighting the company’s technology and cost leadership as key factors behind its success in transforming India’s two-wheeler market to electric. While acknowledging concerns surrounding battery technology, BofA maintained that Ola remains a worthwhile investment with its strategic focus on innovation and cost-efficient production.
The global brokerage believes Ola’s leadership in EV technology, along with its ability to scale production and maintain cost efficiency, will be instrumental in driving growth.
Strong Upside Potential
With both Goldman Sachs and BofA initiating coverage with ‘buy’ ratings, Ola Electric is expected to see strong upside in the coming years, supported by favorable market conditions and a growing focus on sustainability. The company’s ability to navigate challenges such as battery technology while maintaining growth will be crucial to its long-term success.
