On Monday, July 14th, Ola Electric Mobility's shares experienced a significant surge. The stock gained up to 16 percent in early trading, reaching a high of ₹45.93. Several factors contributed to this rise, with the company's quarterly report being the most crucial in shifting market sentiment. A trading volume of approximately 30 crore shares was recorded, substantially higher than the average daily volume.
Reason 1: Decline in Quarterly Losses
Ola Electric released its financial results for the April-June quarter. Although the company is still operating at a loss, the losses decreased compared to the previous quarter, January-March. The net loss in the March quarter was ₹870 crore, while the loss this time was slightly lower. Investors viewed this improvement as a positive sign, leading to a rise in the share price.
Reason 2: Improvement in Revenue and Sales
Although the company's revenue may have been half of what it was the previous year, it has increased from ₹611 crore in the March quarter. Furthermore, the sales volume has also improved, indicating that the company is stabilizing its operations and that demand is improving. This led investors to show interest in the stock.
Reason 3: Strengthening of Gross Margins
Ola Electric showed an improvement in its gross margins this quarter. The company's management believes they are benefiting from government schemes related to production, i.e., the PLI scheme. An improvement of around 1,500 basis points is expected in gross margins. This suggests that costs are decreasing and the company is moving towards profitability.
Reason 4: Strong Performance of the Auto Division
The company's automotive segment also performed better this quarter. According to Ola, the auto unit not only met its targets but also showed positive performance at the EBITDA level. In addition, the company expects this division to soon be in a cash-generating position. This further strengthened investor confidence.
Reason 5: Recovery After a Sharp Decline
Ola Electric's share had fallen 48 percent below its listing price of ₹76 and around 75 percent from its all-time high of ₹157 after listing. After this sharp decline, investors began to see value in it. The market believed that the stock had less room to fall, and buying at this level could be a profitable deal. Because of this, investors purchased shares in large quantities on Monday, and the trading volume increased several times.
Confidence Boosted by Trading Volume
On July 14th, Ola Electric saw trading of approximately 30 crore shares, which is 12 times more than the average of 2.5 crore shares over the previous 20 days. Such a high volume indicates renewed interest in the company within the market, with buying from retail and some institutional investors, particularly, strengthening the stock.
Expectation of Improvement in EBITDA Margin
Ola Electric has indicated that its EBITDA margin for the entire fiscal year 2025-26 could be around 5 percent. This would be a significant improvement compared to the negative 11.6 percent margin reported in the June quarter. This suggests that the company is gradually bringing its losses under control.
Current Status of the Share and Technical Aspects
On the technical chart, Ola Electric's stock had also entered the oversold zone. This made it an attractive level for technical investors as well. IPO-related investors, who still hold shares, are now gradually becoming active in the market again.
Investors Eyeing Upcoming Results
Ola Electric's recent results have once again raised hopes that the company can reduce its losses and return to profitability. The performance of the auto division, government support, and cost control, in particular, have significantly changed market sentiment. It will be interesting to see whether this rally sustains or proves to be a temporary surge.
