Ola Electric slips 6% after Q4 results despite narrower losses; is the stock attractive now?

Shares of Ola Electric fell nearly 6 per cent in Thursday’s trade even as the electric two-wheeler maker reported a sharp narrowing in consolidated net loss for the March quarter of FY26, aided by aggressive cost controls and improving gross margins.

The company posted a consolidated net loss of Rs 500 crore in Q4FY26, compared with a loss of Rs 870 crore in the year-ago quarter, according to a regulatory filing.

Revenue from operations, however, declined 56.62 per cent year-on-year to Rs 265 crore from Rs 611 crore in Q4FY25, reflecting lower vehicle volumes and softer demand conditions.

The company also reported an EBITDA loss of Rs 82.2 crore for the quarter against an EBITDA profit of Rs 6.5 crore a year ago.

Stock falls despite narrower losses

Ola Electric shares erased gains from the previous two sessions after the company warned that gross margins may moderate in Q1 and Q2 due to commodity inflation and pricing actions aimed at accelerating growth.

The EV maker, however, said it still has enough margin buffer to remain aggressive on pricing and customer value while maintaining healthy unit economics.

The company said its key financial priorities remain recovering volumes, sustaining strong gross margins, maintaining cost discipline, ramping up the Gigafactory and improving operating leverage.

First operating cash-flow positive quarter

In its shareholder letter, Ola Electric said March quarter was a low-volume period but also marked its first operating cash-flow positive quarter.

Consolidated cash flow from operations stood at Rs 91 crore during the quarter, supported by production-linked incentive (PLI) inflows, stronger gross margins, lower operating expenses and tighter working capital management.

Consolidated free cash flow improved

The company said its auto business generated Rs 213 crore in cash flow from operations and Rs 173 crore in free cash flow during the quarter, while the cell business remained in investment mode as the company scaled its Gigafactory and prepared for the next phase of battery and storage products.

Gross margins improve sharply

Ola Electric said consolidated gross margin rose to 38.5 per cent in Q4FY26 from 34.3 per cent in Q3FY26 and 13.7 per cent in Q4FY25.

The company claimed this margin profile is now ahead of most traditional two-wheeler manufacturers, including internal combustion engine (ICE) players.

The company attributed the improvement to lower costs, better operational efficiency and tighter expense controls.

Opex may fall further

Calling FY26 a “year of cost reset”, Ola Electric said consolidated operating expenses, including lease rentals, declined sharply to Rs 428 crore in Q4FY26 from Rs 844 crore in Q4FY25.

The reduction came through network rationalisation, lower sales and service costs, tighter overhead control and stronger operational governance.

The company expects operating expenses to decline further towards Rs 350 crore per quarter over the next few quarters as the full benefits of cost-cutting measures start reflecting.

Brokerages remain cautious

Brokerage firm HSBC maintained its “Reduce” rating on the stock and cut the target price to Rs 33 from Rs 45.

HSBC said Ola Electric’s focus on sustainable volume growth and margin expansion after a year-long efficiency programme is positive, but delays in battery cell production scaling have weakened a key competitive advantage.

The brokerage also cut estimates due to weak volume growth expectations.

Meanwhile, Citigroup maintained a “Sell” rating on the stock and raised the target price to Rs 26 from Rs 22.

Citi said Q4 revenue came below estimates due to lower average selling prices, partly because of accounting changes related to extended warranties.

The brokerage acknowledged the company’s strong gross margin improvement and management’s focus on cost reduction and cash-flow generation, but said sustained volume recovery remains critical.

Citi added that nearly 90 per cent of Ola Electric’s operating expenses are fixed, which could keep EBITDA under pressure if volumes fail to improve materially.