Ola Electric Mobility stunned markets on Thursday as its shares surged nearly 20% to ₹47.76 intraday, defying a brutal 50% year-on-year revenue slump. The stock closed at ₹47.66 – a spectacular rally that left analysts scrambling despite the company reporting wider Q1 FY26 losses.
The investor optimism stems from a dramatic turnaround in the auto segment's profitability. EBITDA margins catapulted from -90.6% in Q4 FY25 to -11.6% this quarter, signaling operational improvements. This leap follows Ola's aggressive cost-cutting initiative "Project Lakshya," which slashed monthly auto operational expenses from ₹178 crore to ₹105 crore.
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Driving the bullish sentiment is management's bold gross margin forecast. In a shareholder letter, Ola revealed: "This is our best GM performance ever," crediting Gen 3 battery optimization and vertical integration. The company targets 35-40% gross margins by FY26-end – potentially boosting per-vehicle profits to ₹40,000-45,000.
While revenue plunged 49.6% YoY to ₹828 crore amid fierce competition from TVS, Ather, and Bajaj, sequential performance showed green shoots. Quarterly revenue rebounded from ₹611 crore in Q4 FY25, suggesting stabilization.
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The stock's wild ride continues: though up 41% over six months, it remains 53% below last year's peak. With market cap at ₹17,740 crore, investors appear betting that Ola's cost discipline and margin targets will offset current revenue headaches and chart a path to profitability.
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