Ola Electric Shares up 22% in Two Days Despite Reporting Loss in Q1. What’s Behind this Rally?

Shares of Ola Electric rallied for the second-consecutive session on Tuesday, July 15, even after the company reported a net loss of ₹428 crore in Q1FY26. This rally can be attributed to declining losses on a sequential basis.

Why did the stock rally?

Ola Electric shares tumbled 69% from their 52-week high; however, they witnessed strong buying interest as investors took note of the company’s improved Q1FY26 performance compared to Q4FY25.The losses narrowed to ₹870 crore in the preceding quarter, even though it widened on a YoY basis.

Revenue from operations in the June quarter came at ₹828 crore, up from ₹611 crore in the March quarter.

“What sparked investor interest was the sequential improvement—losses narrowed significantly from ₹870 crore in Q4 FY25—and the operational turnaround in the automotive segment. Notably, the unit achieved positive EBITDA in June and delivered a record gross margin of 25.6%, driven by vertical integration, disciplined cost control under Project ‘Lakshya,’ and the shift to more efficient Gen‑3 models,” said Harshal Dasani, Business Head, INVasset PMS.

He added, “Market confidence was further bolstered by Ola’s guidance for FY26, with projected gross margins of 35–40%, supported by PLI-linked incentives and a target of becoming EBITDA-positive from Q2 onward. The company also introduced rare-earth-free motors, addressing long-term supply chain concerns and adding credibility to its localisation roadmap.”

Ola has pegged to sell vehicle units between 3,25,000 to 3,75,000 and generate a revenue of ₹4200 - ₹4700 crore in FY26.

As per the press release by the company post Q1 results, the benefits under Production Linked Incentive (PLI) will commence from Q2 for the Gen 3 product portfolio. Gross margin is expected to go up by 35% - 40%, while full-year auto EBITDA is set to go above 5%.

Should you buy Ola Electric?

The share price of Ola Electric surged by over 18% on the BSE following the release of its Q1 numbers earlier in the day. The company shares jumped over 4% to ₹48.88, taking the two-day gains to 22%.

Goldman Sachs has maintained a ‘Buy’ rating on Ola Electric stock and raised the target price to ₹63 from ₹60 earlier. HSBC also raised the target price to ₹49 apiece, while maintaining ‘hold’ rating.

After multiple misses, strong gross margin expansion in Q1 came as a surprise, HSBC said. The banking giant also weighed down the company's longer-term margin.

On the other hand, Kotak Institutional Equities (KIE) retained its ‘Sell’ rating on Ola Electric stock. “While the company has improved its profitability significantly, volume offtake remains below expectations given muted industry growth and increased competitive intensity, which remains an area of concern. Maintain SELL with an unchanged FV of ₹30 based on DCF methodology (3.5X FY2027E EV/sales),” it said.

(The views and recommendations expressed by experts are their own and not those of Bizz Buzz. Investors are advised to consult certified professionals before making any investment decisions.)