Foreign brokerages including Goldman Sachs and Citi reduced their target prices on Ola Electric Mobility after lower-than-expected performance in the December quarter. The net loss of the electric vehicle manufacturer widened during the quarter to ₹564 core, against ₹376 crore reported a year ago.

While Citi revised its 12-month target price to ₹85 from the earlier target price of ₹90, Goldman Sachs reduced its target price by 14% to ₹101 per share.

The stock of Ola Electric extended its losing streak for a third day on Friday to end the session at ₹69.97 on the NSE, down 2.6% from the previous close. Shares of the company have already come off 18.4% so far this year and are down by 52% from the peak seen in August last year.

According to Citi, despite a slight improvement in gross margin, the December quarter earnings came in below estimates as EBITDA (earnings before interest, taxes, depreciation and amortization) loss spiralled.

The company’s management attributed one-off costs related to warranty and one-time employee-related expenses for the increased operating expenses, which inflated overall costs by 12 percentage points (ppt).

“While the management expects a sharp recovery in volumes as well as margins (Gen 3 launch), we would wait for a visible improvement in deliveries,” wrote Citi in an investor note.

Other factors that impacted Ola’s profitability during the quarter include higher sales and marketing expenses during the festive season, network expansion and negative operating leverage, wrote Citi.

Also read: Ola Electric Mobility Q3 Results: Net loss widens, revenue drops 19%

The net revenue of Ola Electric Mobility declined by 20% in the December quarter to ₹1,069 crore. However, the reported revenue was 7% higher than Goldman Sach’s expectation as the impact of post-festive discounts was below its estimates.

According to Goldman Sachs, the management has spent time improving service network coverage and product quality during the quarter.

“On the quality front, upcoming Gen 3 portfolio (11% cost savings over Gen2) will use more reliable mid-drive motors assembled in-house vs current hub motors being sourced externally,” wrote Goldman Sachs.

It further added that as far as service is concerned, the company has been able to reduce the service turnaround time to 1.1 days in the December quarter compared to 2.5 days reported in the September quarter.