Ola Electric Mobility Ltd. experienced a sharp decline in its share price on Thursday, falling nearly 6% and erasing recent gains. The drop occurred despite the electric vehicle manufacturer reporting a narrowing of its losses for the March quarter of FY26.
The company’s stock hit a low of Rs 34.83 apiece, triggered by concerns over potential moderation in gross margins during Q1 and Q2 due to commodity inflation and aggressive pricing strategies. Several brokerages subsequently reaffirmed their 'Sell' ratings, with target prices suggesting a significant downside for the stock.
Q4 FY26 Financials: Mixed Results
For the fourth quarter of fiscal year 2026, Ola Electric reported a reduction in losses to Rs 500 crore, a notable improvement from Rs 870 crore in the same period last year. This marked the company's first operating cash-flow positive quarter, with consolidated cash flow from operations (CFO) reaching Rs 91 crore. This was attributed to PLI inflows, stronger gross margins, reduced operating expenses (opex), and tighter working-capital discipline.
However, consolidated revenue for the Bhavish Aggarwal-led company saw a substantial decline of nearly 57%, falling to Rs 265 crore from Rs 611 crore in the corresponding quarter last year.
Positively, Ola Electric achieved an industry-leading consolidated gross margin of 38.5% in Q4 FY26, up from 34.3% in Q3 and 13.7% in Q4 FY25. Operating expenses, including lease rentals, also saw a significant reduction from Rs 844 crore in Q4 FY25 to Rs 428 crore in Q4 FY26, primarily due to network rationalisation, tighter sales and service costs, and improved operating governance.
Brokerage Outlook and Target Prices
Despite the narrowed losses, brokerages remained cautious, largely due to the revenue decline and the company's own forecast of potential gross margin moderation. Ambit Capital reiterated a 'Sell' rating with a target price of Rs 24. Emkay Global assigned a target of Rs 25, while Citi projected Rs 26. HSBC further cut its target price to Rs 33, implying a potential downside of up to 31% from Thursday's low levels.
Ola Electric's Strategic Priorities
In its letter to shareholders, Ola Electric outlined clear financial priorities:
- Recovering sales volumes.
- Maintaining strong gross margins.
- Exercising discipline in operating expenses.
- Ramping up the Gigafactory operations.
- Converting existing gross block into operating leverage.
The company expects operating expenses to reduce further towards Rs 350 crore per quarter over the next couple of quarters. It also stated that the core auto capital expenditure is in place for up to 1 million vehicles of annual capacity, and the Gigafactory Phase 1 infrastructure is ready for a 6 GWh scale-up. Ola Electric believes that with its reset opex base and current gross margin structure, it can achieve adjusted operating EBITDA breakeven at 20,000-25,000 units per month, subject to pricing, mix, and commodity conditions.