Citi Research has initiated a “Buy” call on Ola Electric Mobility Ltd. with a target price of ₹90, highlighting its dominance in India’s electric two-wheeler (E2W) market and positioning it ahead of traditional players like Bajaj Auto and TVS Motors in the electric mobility space.
Why Citi Prefers Ola Over Bajaj Auto and TVS Motors:
- Market Leadership in E2W: Ola Electric holds a ~38% market share (FY25 YTD) in India’s electric two-wheeler market, significantly outpacing competitors.
- Technological Edge: Ola’s integration of Li-ion cell manufacturing and its focus on cutting-edge R&D position it as a forward-looking EV player compared to Bajaj and TVS.
- Future Product Launches: Ola is gearing up for the release of electric motorcycles and E3Ws (electric three-wheelers), which could further solidify its market presence.
- Valuation Potential: Citi’s valuation model suggests Ola’s long-term prospects in EVs offer better growth potential than Bajaj Auto and TVS Motors. It prioritizes Ola in the hierarchy: Eicher > Hero > Ola > Bajaj Auto > TVS.
Key Differentiators for Ola Electric:
- Scale and R&D Investments: Ola’s large-scale production capabilities and investment in advanced technology provide a strong competitive advantage.
- Profitability Focus: Citi projects Ola will achieve profitability at the operational level as capacity utilization increases.
- Premium EV Positioning: While Bajaj and TVS cater more to traditional and entry-level segments, Ola’s premium EV portfolio drives higher margins.
Risk Factors:
Citi acknowledges certain risks for Ola Electric, such as:
- Weak EV penetration in India compared to global levels.
- Intense competition in the E2W market.
- Consumer concerns about product quality and after-sales service.
