Ola Electric, once celebrated as a disruptor in the electric mobility space, is now grappling with serious financial distress. The company has posted a staggering 60 percent decline in revenue for the January to March 2025 quarter, falling to Rs 611 crore. In addition, its net loss surged to Rs 870 crore, raising alarm bells across the market.

Worsening the situation, Ola’s auditor BSR & Co LLP has flagged the company’s viability as a going concern, citing negative operating cash flows of Rs 2,391 crore, up significantly from Rs 633 crore a year ago. This steep decline in performance comes less than a year after the company’s Rs 5,275 crore IPO, which had raised hopes of long-term sustainability and scale.

Despite an unqualified audit opinion, the auditors highlighted that persistent losses and poor sales performance demand urgent financial and operational corrective measures. Without such steps, the company's ability to continue its operations could be compromised.

Cash Burn and Unused IPO Proceeds

While Ola raised over Rs 5,275 crore in its IPO, it has only utilised about Rs 2,452 crore. Of the remaining amount, Rs 2,775 crore is parked in fixed deposits, leading to questions about cash burn rates, liquidity planning, and the rationale for Ola’s recent Rs 1,700 crore debt raise via non-convertible debentures.

This choice to raise debt instead of equity has triggered investor concern, especially in light of the company's deteriorating fundamentals. Financial experts argue that increased borrowing during such vulnerable periods can trap Ola in a debt cycle, using new funds merely to service old obligations.

Plummeting Market Share and Weak Delivery Numbers

During the quarter, vehicle deliveries fell sharply to 51,375 units, compared to over 115,000 units a year earlier. The net loss surged 54 percent quarter-on-quarter and more than 109 percent year-on-year. The start of FY26 has shown little sign of recovery, with only 36,500 units sold in the first two months, placing Ola behind rivals like TVS Motor and Bajaj Auto.

Despite achieving full-year sales of 359,221 units in FY25, up from 329,549 units in FY24, the company has continued losing market share. Once controlling over 50 percent of India’s electric two-wheeler market, Ola now faces fierce competition from players like Ather Energy, which posted a 26 percent rise in Q4 revenue and an 18 percent reduction in losses.

Analyst Downgrades and Stock Market Response

The stock market has reacted negatively to Ola’s financials. Shares dropped by 4.49 percent to Rs 50.85 on the NSE, which is 68 percent below its all-time high of Rs 157.40 in August 2024. Leading brokerage Kotak Institutional Equities downgraded the stock to sell and slashed the target price to Rs 30.

Kotak cited execution delays in the electric motorcycle segment, weaker demand, and rising debt levels as key concerns. The brokerage also cut volume estimates for FY26 and FY27 by 32-34 percent, warning that Ola must scale rapidly to avoid a liquidity crunch.

Ola’s Response and Optimism

Chairman and Managing Director Bhavish Aggarwal acknowledged the challenges during the Q4 earnings call. He admitted that Ola’s market dominance has weakened, but maintained confidence in a turnaround, banking on new launches, better operational efficiency, and a revamped retail model under Project Vistaar.

The company has also launched Project Lakshya, aimed at cost-cutting and boosting efficiency. Ola claims to have reduced operating costs in its auto segment to Rs 121 crore in April, with a further reduction target of Rs 110 crore by June.

Aggarwal has set a Q1FY26 guidance of 65,000 vehicles sold, revenue between Rs 800 crore and Rs 850 crore, and gross margins of 28 to 30 percent, up from 19.2 percent in Q4. He also revised the breakeven volume target from 50,000 to 25,000–30,000 units per month, expressing hope that Ola will break even by Q2FY26.

Investor Skepticism Remains

However, investors and analysts remain unconvinced. With three consecutive quarters of falling revenues and rising losses, Ola’s path to breakeven seems increasingly ambitious. Experts caution that without a sharp rebound in sales and disciplined financial management, Ola’s survival could be at stake.

The choice of debt over equity, despite having unused IPO funds, has only worsened concerns. Critics argue that such a move, while faster, increases the financial burden and limits flexibility during uncertain market conditions.

Can Ola Still Turn Around

While Ola Electric continues to show some resilience through innovation and restructuring, the ground realities of declining sales, operational inefficiencies, and increasing debt are difficult to ignore.

The next few quarters will be critical. Either Ola Electric stabilises operations, increases market penetration, and restores investor confidence, or it risks becoming another cautionary tale in India’s growing list of startups that expanded too fast and crashed harder.

Conclusion

Ola Electric’s current situation is a stark reminder that vision alone is not enough. To survive in India’s highly competitive EV landscape, the company must balance innovation with discipline, and growth with sustainability. With its financials under stress, investor patience wearing thin, and market share slipping away, Ola’s turnaround depends entirely on immediate execution, cost control, and regaining trust.

Without these, what began as a bold EV journey could soon end as an expensive lesson in what not to do when scaling in the electric mobility space.

The Upcoming IPOs in this week and coming weeks are Ganga Bath Fittings, Victory Electric Vehicles International, Wagons Learning.

The Current active IPO are 3B Films

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