Ola Electric Shares Tumble 6% on PLI Penalty Reversal, Auditor Worries

Ola Electric shares declined over 6% following its Q1 results, impacted by a ₹57 crore provision reversal for a Production Linked Incentive (PLI) penalty and auditor concerns. The company’s auditor highlighted pending Ministry of Heavy Industries (MHI) approval for investment milestone compliance.

• Reversal of a ₹57 crore provision for battery Production Linked Incentive (PLI) targets.
• Auditor concerns regarding pending Ministry of Heavy Industries (MHI) approval for investment milestone compliance.

Despite these factors weighing on the stock, Ola Electric’s consolidated net loss narrowed significantly in the June quarter. Revenue from operations, however, saw a substantial year-on-year decrease during the same period.

• Net loss: ₹336 crore (Q1), from ₹428 crore (year earlier) and ₹500 crore (March quarter).
• Revenue from operations: ₹455 crore (Q1), a 45% year-on-year drop from ₹828 crore.

The company demonstrated a sequential recovery in its operational metrics, indicating growing market presence and customer engagement. Vehicle registrations, orders, and deliveries all showed strong quarter-on-quarter growth, reflecting improving market traction.

• Vehicle registrations: Surged 97% quarter-on-quarter to 43,719 units.
• Electric two-wheeler market share: Increased from 5.1% to 8.4%.
• Orders: Nearly doubled to approximately 44,000 units.
• Deliveries: Rose to around 39,200 units.

Ola Electric maintained a robust gross margin even amidst rising commodity costs, which impacted raw material expenses. The firm also detailed its ongoing cost optimization efforts, aiming for a more efficient operating structure in the coming quarters.

• Gross margin sustained at 30.5%.
• Commodity costs increased by about 11% (copper, aluminum, lithium, plastics, polymers).
• Consolidated operating expenses: Declined 22% quarter-on-quarter to ₹333 crore.
• Target operating cost base: Approximately ₹300 crore per quarter.

The company anticipates that operating leverage combined with continued cost efficiencies will further expand adjusted operating EBITDA margins as monthly deliveries scale up. This outlook suggests a focus on sustained profitability through volume growth and disciplined spending.