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Ola Electric Mobility Ltd’s September quarter (Q2FY27) brought no relief, with the electric two-wheeler maker reporting a higher-than-expected consolidated Ebitda loss of ₹218 crore. The company’s revenue was down 39% year-on-year to ₹421 crore.
Ola’s revenue has shrunk from about ₹5,000 crore in FY24 to ₹2,250 crore in FY26. H1FY27 revenue declined 42% year-on-year to ₹875 crore. The revenue plunge reflects Ola’s move from a high-growth, company-owned, direct-to-consumer (D2C) model to a dealership-based model.
The transition is yet to translate into better quarterly operating performances. Ola needs this shift to yield the desired results in terms of recovering volumes and protecting profit margins.
India’s electric two-wheeler market is expanding rapidly, with industry volumes reaching 599,000 units in Q2, up almost 83% year-on-year, as per government vehicle registration data. But Ola’s growth trajectory has diverged. However, Ola’s vehicle deliveries were down 34% year-on-year to 34,667 units in Q2.
The trend persisted in October too, when electric two-wheeler registrations reached 224,064 units, up 48% year-on-year, while Ola’s dropped by 26% to about 12,000 units. Ola’s market share narrowed to 5.4% in October from about 35% in 2024.
“The company will have to sustainably reach 25,000 monthly volumes in order to achieve cash breakeven levels,” said analysts from Kotak Institutional Equities. They added that the quarterly consolidated free cash flow outflow of ₹350 crore remains an area of concern.
On the Q2 earnings call, Ola’s management said demand now exceeds supply, citing a paid-order backlog and delayed delivery of roughly 5,000 units due to a charger shortage.
Ola’s shift from company-owned stores to dealerships is progressing rapidly. The first dealer store was opened on 4 September, and by 8 November, the company had 255 dealers with 319 operational stores. It plans to expand to 450 stores by December and 700 by March.
The model can help reduce the fixed cost of operating front-end sales touchpoints, shift the inventory and part of the working capital burden to dealers and potentially improve sales and service reach. The management expects the current gross margin of 30% to be adversely affected in the near term due to dealer commissions.
Ola’s real advantage lies in vertical integration. Designing vehicles, in-house components and its own battery packs help it to reduce the bills-of-materials cost by 15% to 20% as compared to rivals, said the management.
Ola plans to ramp up its 6 GWh cell factory, integrate nickel manganese cobalt (NMC) and lithium iron phosphate (LFP) cells into vehicles, launch its Shakti energy storage products and eventually expand cell capacity towards 20 GWh, subject to successful yield, demand and funding. The expansion of the dealer network and the cell plant is yet to show in the revenue numbers.
Ola’s shares traded more than 3% lower on Friday as investor hopes of a turnaround were dashed. The near-term outlook depends on whether the dealer-led transition converts into retail volumes and lower fixed costs, and the cell manufacturing and deeper vertical integration deliver on the promised cost benefits.
Ola needs to demonstrate sustained demand recovery. Until then, the stock is likely to remain sensitive to operational milestones and the management guidance.
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