Ola Electric shares surge 20% following new scooter launches and Citi’s ‘Buy’ rating

Shares of Ola Electric soared by 20% on Wednesday, reaching Rs 88.16 on the BSE and hitting the upper circuit limit. This rally was driven by the introduction of two new electric scooters targeting gig economy workers and budget-conscious consumers. The launch of the S1 Z and Gig models marks a strategic move to cater to these segments, expanding Ola Electric’s product portfolio.

The company’s market capitalisation now stands at Rs 38,886 crore (approximately $4.6 billion) based on the closing price. This rise in stock value was also influenced by global brokerage firm Citi initiating coverage on Ola Electric with a ‘Buy’ rating and a target price of Rs 90. Citi estimates that Ola Electric holds a 38% share in India’s electric two-wheeler market, the highest in the country.

Citi’s positive outlook on Ola Electric stems from the company’s broad product range, strong R&D initiatives, significant vertical integration (including lithium-ion cell manufacturing), and the large scale of production. Additionally, upcoming launches of electric motorcycles and three-wheelers are expected to boost volumes further.

However, Citi acknowledged challenges, particularly regarding Ola Electric’s service reputation. “We recognize the recent negative service perception but expect it to improve as the supply chain catches up with the volume growth,” the report stated.

The newly launched scooters, Gig, Gig+, S1 Z, and S1 Z+, are priced between Rs 39,999 and Rs 64,999 as an introductory offer. These models aim to compete with companies like Yulu Bikes, which are popular among delivery partners in quick commerce and logistics sectors.

Bhavish Aggarwal, CEO of Ola Electric, emphasized the growing gig economy in India, which is expected to double in the coming years to over 10 million workers. In a post on X, he highlighted the poor quality and high prices of current options for these workers, stating that the new Ola Gig scooters would address this issue.

In addition to the scooters, Ola Electric introduced the ‘Ola PowerPod,’ a portable battery pack priced at Rs 9,999. The PowerPod functions as an inverter with a maximum output of 500W, capable of powering small household appliances.

During the Q2 earnings call, Aggarwal revealed plans to launch 20 new products across two- and three-wheeler categories over the next two years, with at least one new product release each quarter.

Despite the positive developments, Ola Electric has faced criticism over its servicing network and customer complaints. The Central Consumer Protection Authority issued a notice to the company, to which Ola Electric responded by stating that it had resolved 99.1% of existing complaints.

Citi’s report also highlighted potential risks for Ola Electric, including weak EV market penetration, intense competition, negative perceptions of product and service quality, technology obsolescence, and sustained net losses.

On Wednesday, Bhavish Aggarwal met with SoftBank founder Masayoshi Son during Son’s visit to India, signaling potential strategic discussions.

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