Ola Electric Could See 35% Upside, Says BofA On Initiating 'Buy'

Bank of America initiated coverage on Ola Electric Mobility Ltd. with a 'buy' rating, expecting a potential upside of 35%. It cited expanding product portfolio and large addressable market share as the factors behind its positive outlook.

Electric two-wheeler adoption in India is currently at about 6.5% with e-scooters priced even below petrol prices, BofA said in a report on Sept. 17. "This is an important inflexion in EV curve."

The brokerage initiated its coverage with a target price of Rs 145 per share.

Despite being a new entrant, the Bhavish Aggarwal-led company has sorted the key pieces of the EV puzzle like the proven and expanding product portfolio, reasonable funding access, and large addressable market share among others, BofA said.

BofA forecasts that electric vehicles will reach an 18% penetration rate by fiscal 28 and 25% by financial year 2030. "Ola's right to win in electric two wheelers emanates from its technology focus and backward integration."

Slow electric vehicle transition, drag from battery business, and delay in profitable road mark have been cited as the key risks by the brokerage.

Given battery is key source of cost and product differentiation, keeping it in house makes strategic sense if Ola can execute it right, BofA said. "But, transition into mass production at right yield later in the year will be real test."

Earlier, Goldman Sachs initiated coverage on Ola Electric Mobility Ltd. with a 'buy' rating and a target price of Rs 160 per share, implying a potential upside of 50%.

As of August 2024, Ola Electric holds a 32% market share in India’s fast-growing electric two-wheeler market.

The scrip rose as much as 8.8% to Rs 117.1 apiece to the highest level since Sept. 3, 2024. The stock was trading 8% higher at Rs 116.2 apiece, as of 01:31 p.m. This compares to a 0.17 rise in the NSE Nifty 50 index.

The scrip has risen by 28% since its listing on Aug. 9. The total traded volume so far in the day stood at 1.1 times its 30-day average. The relative strength index was at 60.

Out of five analysts tracking the company, four maintain a 'buy' rating and one suggests 'sell,' according to Bloomberg data. The average 12-month consensus price target implies an upside of 24.6%.