Ola Electric (OLAE.BO): Path to sustainable free cash flow generation less clear; down to Sell

We downgrade Ola Electric to Sell from Neutral, as we see better return potential in other parts of our 2W coverage. Our revised 12-m TP is Rs23 (vs Rs39.28) implying 28% downside (vs coverage average upside of +20%). Our more cautious view on the stock is based on (1) More challenging path to free cash flow given relatively high interest cost and capex needs of the cell and E2W business, during a more extended period of estimated operational losses at current market share levels; (2) the need to achieve 3.6x to 7.1x higher topline vs FY26 over FY28E to FY30E (in order to cover current capex and interest servicing requirements) compared to FY26 over FY24 performance where topline was 55% lower;