Ola Electric Mobility Q2 Results: Full year revenue, margin guidance cut; Stock falls

Shares of Ola Electric Mobility Ltd. are locked in a 5% lower circuit on Thursday, November 6, in response to its September quarter results announcement. The company has also cut its revenue and margin guidance for the full year.

The company's net loss at the end of the September quarter narrowed to ₹418 crore from a net loss of ₹495 crore it reported during the same quarter last year. Estimates from Kotak Institutional Equities had pegged the loss to narrow further to ₹346 crore.

Kotak had projected losses for the quarter to narrow due to lower provisions from last year, cost control measures, and a higher mix of the Gen-3 platform.

Revenue for the quarter declined by 43.2% to ₹690 crore from ₹1,214 crore last year. The figure is in-line with the Kotak projection of ₹685 crore. A decline in volumes weighed on the company's topline.

For the full year, Ola Electric now sees revenue to be between ₹3,000 crore to ₹3,200 crore, compared to the earlier guidance of ₹4,200 crore to ₹4,700 crore. It also sees margins for the auto business to be around 5% from the earlier target of around 5%.

Volumes for Ola Electric fell 44% during the quarter compared to last year and 19% on a sequential basis to 55,000 units.

Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) for the quarter narrowed to a loss of ₹203 crore from a loss of ₹379 crore during the year-ago period. Kotak's estimate projected the figure to be a loss of ₹161 crore.

Demand outlook, PLI benefits and commentary on the road ahead are some of the important things that the street will be watching out for from the management.

Ola Electric's auto business turned EBITDA positive for the first time, supported by a 30.7% gross margin and a reduction of nearly 52% in operating expenses, the company said in its letter to shareholders. The business also turned cash-generative, with underlying cash flow from operations of ₹15 crore.

"In the recently concluded festive season, sales were flat year on year. We see this as a healthy transition phase before the next wave of mainstream adoption, driven by value-conscious consumers recognising the superior performance and lower cost of EV ownership. In this context, our focus has been clear — consolidate costs and achieve profitability, streamline operations and strengthen fundamentals, and prepare for the next phase of growth across both auto and energy," the letter stated further.

The company also spoke about intensifying competition, citing may other OEMs resorting to aggressive discounting and elevated channel incentives to pursue short-term market share. "We have taken the opposite approach — focusing on improving our cost structure, deepening product quality and reliability, and driving margin expansion," the company stated.

Shares of Ola Electric Mobility are currently trading 5% lower on Thursday ahead of the results announcement at ₹47.55. The stock trades below its IPO price of ₹76 and 69% below its post-listing high of ₹157.