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Ola Electric shares jump 18% on first operating profit, strong FY26 outlook

With Production Linked Incentive (PLI) benefits starting to accrue from the second quarter for the third generation (Gen 3) products, the company expects its gross margins to improve to 35-40 per cent during the year

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Our Special Correspondent
Published 15.07.25, 09:54 AM

Shares of electric two-wheeler maker Ola Electric surged 18.36 per cent on the Bombay Stock Exchange on Monday as the company reported that its automobile business turned positive at an operating profit level for the first time in June and a strong outlook for 2025-26.

Ola Electric said that the company expects to sell between 3,25,000 to 3,75,000 vehicles and generate revenue of 4200-4700 crore. With Production Linked Incentive (PLI) benefits starting to accrue from the second quarter for the third generation (Gen 3) products, the company expects its gross margins to improve to 35-40 per cent during the year.

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The company also expects the auto business to remain EBITDA (earnings before interest, taxes, depreciation and amortisation) positive from Q2 onwards.

In FY25, the company had delivered 3,59,221 vehicles and had clocked a consolidated revenue of 4,645 crore.

For the quarter ended June 30, 2025 (Q1FY26), the company posted a consolidated net loss of 428 crore against 347 crore in the corresponding quarter of the previous year. Consolidated revenue from operations during Q1FY26 stood at 828 crore compared with 1,644 crore in Q1FY25.

“This has been a transformative quarter for us. We have transitioned our strategy from aggressive penetration to a more balanced profitable growth strategy. After the initial growth stage, industry is now consolidating before another growth phase in the future,” Bhavish Aggarwal, chairman and managing director, Ola Electric, told analysts at the quarterly earnings call.

He said that the improvement in gross margin (25.8 per cent in Q1FY26 from 18.4 per cent in Q1FY25) and also the focus towards reduction in operating expenses has resulted in an improvement in profitability. “In the near term, we expect the auto business to be operationally cash positive and by end of FY26 to be free cash positive,” Aggarwal said.

Rare earth risk

Aggarwal said that on the rare earth risk management, the company has a dual strategy of managing through alternate suppliers of magnets while also coming out with rare earth-free motors starting from the next quarter.

The company is also expecting to fully utilise the 1.4 GWh capacity at its cell factory and scale it up further to 5GWh by FY27. The capital expenditure planned by the company for 5GWh is 2,800 crore, of which the company has already invested 1,500 crore.

“We don’t foresee the need to expand cell gigafactory capacity beyond 5GWh in the next 3-4 years,” Aggarwal said.

Rare Earth Elements Electric Vehicles (EVs) Ola Electric
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