- Ola Electric share price has risen by about 25% in the last two sessions and its new strategic growth plans have proven a hit with investors.
Ola Electric share price extended its resurgence on Wednesday, trading at ₹51.51 and up by 14.9% in the intraday session at the time of writing. The e-mobility company’s stock gained 8.7% on Tuesday, and has now recovered from historical lows of ₹40 recorded last week to hit 10-week highs. This signals a potential reversal for the company, which has lost about 63% of its value since it got listed at the NSE a year ago.
What is Propelling Ola Electric Share Price?
The current resurgence is driven by Founder Bhavish Aggarwal’s announcement of a new strategy that promises to increase the company’s profitability and market share. The strategy involved the manufacture of homegrown batteries, new product launches and vertical integration.
Also, the gains in the last two days have resulted in a technical breakout after a prolonged downtrend that ushered in a bullish double-bottom pattern. Underlying the technical breakout was a block deal that involved 0.3% of the total tradeable shares. Investors read it as a sign of growing confidence in the company, and the 577% uptick in trading volume above five-day average has provided substantial propulsion.
Ultimately, the aim is to increase its market share by between 25%-30%. Ola Electric Mobility LTD (NSE: OLAELEC)has already developed the Bharat 4680 battery which it will install in its vehicle and help increase its margins. Its latest product line includes the S1 Pro Sport Scooter and Roadstar X+ electric motorcycle.
Also, the company plans to start redeploying rare earth-free motors starting December. The move is expected to increase self-dependence and reduce reliance on imports, which often come with periodic disruptions from supply chain constraints. In addition, Ola Electric has introduced AI integration into its product line, with the MoveOS 6 operating system designed to improve user experience and help bring in more new customers.
Ola Electric’s Financials Stabilising
Meanwhile, Ola Electric share price upside is also supported by a relatively healthy financial standing. It reduced its loss to ₹4.28 billion from ₹8.7 billion in the last quarter, and has recently revised its margin target to between 35%-40% in the FY2026, up from 20.5%. This has added confidence in the market and will likely help bring more capital inflows. Furthermore, the company’s Founder and Chairman, Aggarwal says it is on course to become free cash flow positive by fiscal year 2026, which supports the optimistic narrative.
Analysts Urge Caution
Despite its newfound momentum, analysts urge caution, much as they also forecast low double-digit growth potential in Q3 and Q4. For instance, both TipRanks and Investing.com have an average price target of ₹46 in the next 12 months, implying about 13% upside from the current level. However, HSBC’s perspective is more bullish, with its analysts estimating a price target of ₹49. Concerns are primarily around the company’s ability to execute its news growth strategy efficiently, which could potentially put a strain on its margins.
GST Reforms Present an Underlying Risk
While the current Goods and Services Tax (GST) regime is supportive of the EV industry growth in India, recent proposals to amend the policies could spell trouble to Ola Electric Mobility Ltd and its peers. EVs are taxed just 5%, compared to a 28% tax levied on vehicles and two-wheelers with internal combustion engines. This has served as an incentive to consumers to buy EVs and has helped drive up adoption.
However, policymakers are currently exploring the option of lowering the GST on internal combustion engines to 18% as a way of boosting growth of the broader vehicle manufacturing industry in India. If implemented, that could reduce the current price advantage enjoyed by EVs and potentially impact sales in the nascent industry.
On the other hand, EV industry stakeholders are also pushing back and have been calling for reforms in the sector to include a flat rate 5% tax on all EV components. They argue that some component parts are taxed heavily, resulting in an “inverted” tax structure and accumulation of tax credits that are difficult to utilize and constrain cash flow. If they convince authorities to streamline the GST right from the components, it could be a great boost to the EV industry and support Ola Electric’s growth plans.
Ola Electric Share Price Primed For Near-Term Gains With A Caution
Looking ahead, Ola Electric share price will likely stay on the growth path in the near-term, with the technical breakout sending a signal of the onset of a reversal. Action above the ₹50 psychological support will be key to maintaining the uptrend. Below that level, the stock will need to avoid dropping below the 50-SMA which is at ₹41.81 on the daily chart. However, its substantial gains in the last two days have sent the 4-hour RSI to 86.34, which is within the overbought territory and could result in slower gains or slight corrections.
This article was originally published on InvestingCube.com. Republishing without permission is prohibited.