Despite reporting a big surge in quarterly losses last week, Ola Electric has nearly doubled investors' money in just 10 days or six trading sessions.
Defying all the precautionary notes issued by analysts about investing in the company for short-term gains, the stock jumped another 10% (upper circuit limit) on Monday to settle at Rs 146.03 per share on the BSE.
Ola Electric debuted on the stock exchanges at its initial public offering (IPO) price of Rs 76 on August 9.
"While the long-term potential of Ola Electric, especially given the EV market's favorable outlook, might be appealing, the current valuation appears to be quite speculative. Investors should be cautious, especially given the company's ongoing losses and the high volatility in its stock price. For new investors, it may be wise to wait for a more stable entry point or consider the stock as a long-term play with a high risk-reward ratio," said Saji John, Senior Research analyst, Geojit Financial Services.
The company is now valued at nearly 65,000 crore.
As its Rs 6,145 crore IPO was subscribed only about 4.5 times, trade pundits had raised concerns that the loss-making entity may struggle on the exchanges. They have also questioned Ola Electric's ability to maintain its leading market share due to growing competition.
The company's net loss widened to Rs 347 crore in the June FY25 quarter from Rs 267 crore in the year-ago quarter. Its revenue grew by 34.32% to Rs 1,718 crore in the reported period.
Investors, however, ignored the mounting losses and cheered a strong improvement in the company's EBITDA margin. They are also giving a big thumbs up to Ola Electric's entry in the e-motorcycle segment with the Roaster series.
Further, the company's announcement about the integration of its cells in its own vehicles starting first quarter of the financial year 2026 is seen as a big positive.
"The launch is expected to positively impact as the company benefits from a first-mover advantage in the electric motorcycle segment and the potential for increased market penetration, Ola is likely to see enhanced revenue visibility over the long term. This strategic move could further strengthen its position in the EV market, contributing to sustained growth in its share price," said John.
First 'buy' recommendation
Ola Electric also received its first 'buy' recommendation from global brokerage firm HSBC, which has set a price target of Rs 140.
HSBC expects EV manufacturing costs to decrease significantly by FY27/28, while predicting that costs for internal combustion engine (ICE) scooters may rise due to stricter emission standards.