HSBC raised its price target for Ola Electric after the stock had already risen 22% and reported an operating loss in Q1. This revision reflects increasing optimism for Ola’s long-term prospects. In this post, we’ll discuss some reasons why HSBC changed its price outlook and what this will mean for investors. We’ll also analyze Ola Electric’s performance and outlook.
What’s Behind the 22% Spike in Ola Electric Share Price Target Despite the Q1 Loss: A Deeper Analysis
Ola Electric, one of the companies in India’s expanding EV industry, has just experienced a spike in share price of about 22%. This rapid price action comes on the heels of HSBC increasing its price target on Ola Electric, which may seem counterintuitive considering Ola Electric recently announced a loss in its recent Q1 earnings. So, what are the reasons behind the seemingly good investor sentiment for this move, and what does it mean for the future of the EV player? Let’s examine.
HSBC’s Vote of Confidence: A Higher Price Target
HSBC, a global banking behemoth, has officially endorsed Ola Electric by raising its share price target to newly higher levels. This step isn’t just a bump in price; it shows a strong confidence in the future direction of the company. Analysts are looking well beyond future income statements and potential cash flow. Instead, they are focused on Ola Electric’s clear vision of building an electric vehicle business, as well as the potential scaled-up profitability that could develop over time. This impression comes from these factors:
Future Profit Growth Potential: Although the company is currently not profitable, analysts do see a clear path to profitability with the company. The analysts cited Ola Electric’s economies of scale. They also referred to more cautious and effective cost optimizations, such as “Project Lakshya,” which had reduced operating expenses radically since its implementation. Finally, they cited the overall growth of Electric Vehicle (EV) acceptance and adoption as driving future profitability.
Aggressive Growth Plans including National and International Expansion: Ola Electric is planning on expanding their business well beyond India including expanding that business into many markets in Europe and Southeast Asia. If Ola Electric is trying to grow there, allowing their business to be acceptable to those markets will likely create large revenue streams.
The market’s reaction has been immediate and positive. A 22% jump in share price following HSBC’s announcement demonstrates that investors are buying into the long-term potential, even if the current balance sheet shows a deficit.
Decoding Ola Electric’s Q1 Results: Losses with a Silver Lining
Ola Electric recorded a net loss of ₹428 crore (USD 51.2 million) in Q1 FY26, which is a 23% increase year-on-year. The main areas of spending that contributed to the loss are the large expenditures on research and development, marketing, and capital costs associated with production. Despite these facts, there are some positives to take away from these numbers:
Sequential Improvement: While the year-on-year loss grew, the company was able to significantly reduce its sequential loss from ₹870 crore in Q4 FY25. This would imply the company was becoming more operationally efficient.
- Improved Margins: Ola Electric’s auto gross margins improved significantly, reaching 25.6% in Q1 FY26 versus 13.8% in Q4 FY25. The company expects this to improve further to 35-40% as it benefits from PLI beginning in Q2.
EBITDA Positive Auto Business: Crucially, Ola Electric’s auto business turned EBITDA positive in June 2025, marking a significant milestone in its journey towards profitability. The company anticipates the auto business to remain EBITDA positive from Q2 onwards, with full-year auto EBITDA projected to be above 5%.
Increase in Sales Volume: Although overall revenue contracted year-on-year (due to a highly competitive environment), vehicle deliveries enjoyed a healthy sequential increase of 32.7% in Q1 as demand for its Gen 3 scooter portfolio proved stronger.
Main Factors Influencing the Rise in Share Prices
There are several factors behind the current optimism surrounding Ola Electric:
Resilience in a volatile market: Ola Electric’s shares seem to be remarkably resilient against broader market dips. That suggests there is a belief among investors that it is a long-term value play that can navigate a diminishing short-term market.
Prospects for Future Growth:
New EV models: Ola Electric has a very ambitious product strategy by planning to roll out 12 more two-wheelers by July 2025, which includes all models of scooters and electric motorcycles (including S2 series and S3 series, and the Roadster). The new models, many using self-developed 4680 battery cells (and more rare-earth free motors), will aim to significantly expand their customer base.
Charging Infrastructure: The company continues to apply focused effort on setting up its charging station infrastructure across India, which will positively impact EV adoption levels to customer experience.
Strategic Initiatives and Vertical Integration:
Assured Cell Production: The company’s pursuit of in-house battery cell production (starting on Navratri with the Bharat 4680 cell) is a significant development. This reduces outside supplier reliance, increases supply chain resilience, and provides a meaningful cost advantage.
Rare Earth-Free Motors: The planned introduction of rare-earth-free motors in Q3 is another step in the right direction, taking precautions against potential supply chain bottlenecks and environmental questions.
Software Fees: The company’s MoveOS+ software layer is being adopted by more people, with an estimated 50% of new users subscribing in Q1. This potentially opens a sizeable new revenue stream.
Strategic Partnerships and Investment: It’s been a while since highlighting any new partnerships, but the company is continually seeking out financing (such as a new board approval for raising ₹1,700 crore through private placement of debt), which indicates investor confidence in its growth strategy.
Expert Opinions and Future Outlook
Industry experts aligning with us see that Ola Electric’s focus on market share, vertical integration, and product diversity is of much greater value than its current short-term losses. It’s a similar narrativetos the other high-growth tech companies, like Tesla, which lost billions before finding lasting profitability and market choice.
Long-Term Future: HSBC’s higher price target highlights the need for Ola Electric investors to be long-term thinkers.
Growth Stage: Current losses illustrate the relative nature of high-growth, high-start-up companies’ spending on research and development and expanding geography.
Watch for new product launches: Each upcoming EV model, particularly those with batteries manufactured in-house with a rare-earth-free motor, is a key indicator of future success.
Infrastructure: The growth of the charging infrastructure and service network will ultimately impact market penetration and customer experience.
Be aware of longer-term views: Although Q1 indicated a loss, the constant quarter-over-quarter sequential improvement, margin improvement, and auto business have turned EBITDA positive are strong indicators of top-line performance continuing to improve.
Conclusion
While Ola Electric announced a Q1 loss, its stock jumped, along with HSBC raising its price target, which leaves a good feeling. Ola Electric has expansion plans in place, a renewed approach to cost optimization, and in-house technology for an EV ecosystem that supports them. There is one clear message for investors: stay tuned to future announcements, as Ola Electric continues to electrify value creation.