Summary
HSBC Global Research has initiated coverage on Ola Electric Mobility Ltd., assigning a ‘buy’ rating with a target price of Rs 140, which implies a 26.2% upside potential. The recommendation is based on Ola Electric’s competitive pricing against petrol scooters and its promising battery venture. Despite current high production costs for electric scooters and potential challenges with battery manufacturing, HSBC believes that improvements in cost efficiency and growing consumer awareness will drive EV adoption. The report also notes increasing acceptance of electric vehicles (EVs) in key Indian states like Karnataka, Maharashtra, Tamil Nadu, and Gujarat.
Key Points
– HSBC Global Research has assigned a ‘buy’ rating to Ola Electric with a target price of Rs 140.
– The target price reflects a 26.2% upside potential from the current valuation.
– Ola Electric is the market leader in electric scooters, despite slower overall EV adoption and challenges in battery production.
– Current production costs for EVs are around Rs 1.1 lakh, significantly higher than petrol scooters.
– Regulatory support for EVs is expected to decrease to Rs 10,000 over the next 2-3 years, necessitating a reduction in manufacturing costs to Rs 70,000 for viability.
– Increased consumer awareness and improved cost efficiency are expected to boost EV adoption.
– Significant growth in EV acceptance is noted in Karnataka, Maharashtra, Tamil Nadu, and Gujarat, which are major markets for both two-wheelers and electric vehicles.
