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News Topical, Digital Desk : Ola Electric's stock is facing increasing pressure. After falling nearly 20% in a month and 56% in a year, a report from global brokerage Goldman Sachs has further increased investor concerns. The brokerage downgraded the stock's rating to Neutral and halved its target price. The report raises several questions about the company's growth, profits, and cash flow. Let's understand, in simple terms, what the report says.
Why did Goldman Sachs reduce its target?
Goldman Sachs downgraded its rating on Ola Electric from Buy to Neutral. The biggest blow was seen in the target price, which was reduced from ₹52 to ₹26.
The brokerage believes that the company's growth in the coming years is not as strong as previously estimated. Consequently, revenue estimates for FY26 to FY28 have been lowered.
Market share expectations have changed.
Previously, Ola Electric's market share was expected to reach low-teens, or double-digits, by FY30. However, Goldman Sachs now estimates that the company could remain limited to a mid-single-digit market share. This means that competition in the EV two-wheeler market is increasing, and rapid expansion will not be easy for the company.
Concerns about cash burn and fundraising
are also raised in the report regarding EBITDA loss and capex run-rate. According to the brokerage, the company's cash burn may continue, which could necessitate fundraising in the next 12 to 18 months. If this happens, new fundraising could impact the stake of existing shareholders, which the market generally views negatively.
The biggest challenges facing the company:
Goldman Sachs has clearly stated that Ola Electric needs to take several key steps: - Build a strong and reliable service network - Stabilize the senior leadership team - Improve quality and reliability in upcoming product launches - If the company doesn't act swiftly on these fronts, it may be difficult to regain market confidence.
Why is the stock continuously falling?
The main reasons for the stock's decline are: Increasing competition in the EV sector - Uncertainty about profitability timeline - Cash flow and funding concerns - Brokerage downgrades - When major global brokerages reduce targets, investor sentiment often weakens and pressure on the stock increases.
What should investors understand? The most important thing for investors is that a stock's decline isn't just due to a single report, but also reflects the ground reality of the business and future expectations. If the company demonstrates rapid improvement in its service network, product quality, and growth plan, confidence may return. However, the market currently appears to be in cautious mode.
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