Despite reporting a ₹428 crore net loss in Q1 FY26, Ola Electric’s shares surged over 17%. Investors showed strong confidence in the company’s improving margins, positive EBITDA in the auto segment, and aggressive cost-cutting efforts.
Ola Electric’s Q1 Loss Doesn’t Scare Investors — Stock Rallies Over 17%
Source Image: techinasia
Read More: Glenmark Pharma Shares Jump 14%, Analysts Set ₹2,800 Target
Loss Reported, But Momentum Gained
Ola Electric, India’s leading electric two-wheeler manufacturer, reported a consolidated net loss of ₹428 crore for the first quarter of FY26. While this marks a 23% year-on-year increase from the ₹347 crore loss in Q1 FY25, it’s a significant improvement from the ₹870 crore loss reported in the previous quarter (Q4 FY25).
Revenue dropped nearly 50% year-on-year to ₹828 crore, but that’s still a sharp recovery from ₹611 crore last quarter. These numbers show the company is slowly climbing out of its financial slump.
Auto Division Turns EBITDA Positive
In a major positive development, Ola Electric’s auto business became EBITDA positive in June 2025 — a first for the company. Contributing to this were record gross margins of around 25.6%, thanks to a shift toward its in-house Gen 3 platform scooters and improvements in its proprietary operating system, MoveOS+.
This improvement is not just symbolic — it signals a clear roadmap toward breakeven in coming quarters.
Project ‘Lakshya’ Cuts Costs
A big reason for investor optimism is Ola’s strategic cost-cutting program, codenamed “Lakshya.” Under this initiative, the company reduced auto operating expenditure from ₹178 crore/month to ₹105 crore/month. Overall monthly expenses are now stable at around ₹150 crore.
This fiscal discipline, paired with product efficiency, helped Ola present a path to long-term profitability.
Strong FY26 Guidance
Ola Electric has issued robust guidance for FY26:
-
Revenue Target: ₹4,200–4,700 crore
-
Gross Margin Projection: 35% to 40%
-
Key Innovation: Launch of rare-earth-free motors by end of 2025 — a strategic move to avoid global supply chain dependency
The company also assured investors of a healthy cash position and sufficient runway to meet its targets.
Why the Stock Jumped Despite the Loss
-
EBITDA positivity in its core business
-
Improved gross margins and cost control
-
Clear revenue and innovation roadmap
-
Positive investor sentiment backed by forward-looking statements
Investors viewed this quarter as a potential inflection point. The company’s turnaround signals were strong enough to overshadow the wider losses.
Challenges Still Remain
Despite positive signals, Ola Electric is not out of the woods:
-
Revenue is still down YoY by 50%
-
Non-auto divisions continue to weigh on profitability
-
Regulatory scrutiny and market competition remain
-
The company must sustain momentum while scaling operations
Still, for now, sentiment remains bullish as the EV pioneer repositions itself as a leaner, more focused company.
