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BofA Securities initiated coverage with a price target of ₹145, which implies a potential upside of 35% from Monday’s closing levels.
On the other hand, Goldman Sachs has also initiated coverage and its “buy” recommendation comes with a price target of ₹160, which implies a potential upside of nearly 50% from Monday’s closing levels.
Shares of Ola Electric Mobility are down over 30% from their record high levels of ₹157, which they had surged to within a few days after listing.
HSBC was the first brokerage to initiate coverage on Ola Electric Mobility with a price target of ₹140.
BofA Securities wrote that electric vehicle adoption in Indian two-wheelers is currently at 6.5%, with e-scooters now priced even below petrol scooters, which is an important inflection on the EV curve.
Despite being a new entrant, BofA Securities believes that Ola has sorted key pieces of the Electric Vehicle puzzle, which is proving and expanding its product portfolio, reasonable funding access along with brand & distribution reach.
The brokerage believes that Electric Vehicles will reach 18% penetration rate by financial year 2028 and 25% by financial year 2030 in the two-wheeler segment.
Goldman Sachs also believes that Ola Electric is positively levered to long-term structural trends in India’s Electric two-wheeler market.
The brokerage is expecting Ola Electric’s revenue to grow at a Compounded Annual Growth Rate (CAGR) of over 40% between financial year 2024 and 2030, which implies that the company may reach free cash flow breakeven, excluding subsidies in financial year 2030.
Ola Electric also may see Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) margin of 11.9% and Return on Invested Capital (RoIC) of 27% by financial year 2030, according to the Goldman Sachs estimate.
Response from competition, ability to execute on in-house cell manufacturing, direct-to-consumer network execution and key person risks are some of the key risks for Ola Electric, as highlighted by Goldman Sachs.
Shares of Ola Electric Mobility are set to open 5% higher on Tuesday at ₹112.95.
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