Goldman Sachs has initiated coverage on Ola Electric with a “Buy” rating and set a target price of Rs 160 per share, indicating a 49% upside from the stock’s previous close of Rs 107.
Goldman Sachs views Ola Electric as well-positioned to benefit from long-term structural trends in India’s electric two-wheeler market. The firm projects a robust revenue growth rate of +40% CAGR from FY24 to FY30, forecasting the company to achieve free cash flow breakeven by FY30. Additionally, Goldman Sachs expects Ola Electric to reach EBITDA margins of 11.9% and a return on invested capital (ROIC) of 27% by FY30.
Key aspects highlighted by Goldman Sachs include:
Structural Trends: Ola Electric’s alignment with the significant growth trends in the e2W market.
In-house Battery Cell Manufacturing: The company’s efforts in developing in-house battery cells are seen as a major factor that could drive stock volatility in the near term.
Direct-to-Consumer Model: The direct-to-consumer (D2C) sales and after-sales model are anticipated to be crucial in influencing stock performance.
Risks: Potential risks include competitor responses and the execution of in-house battery cell manufacturing.
