Ola Electric shares rally 14% this week. Analysts see Rs 70 on the horizon despite risks. Should you buy now?

Ola Electric shares rose 14% this week after the company secured Production Linked Incentive (PLI) certification for its Gen 3 scooters. This achievement management says will bolster margins and accelerate its path to profitability. However, the rally comes against the backdrop of steep losses over the past year and intensifying competition, prompting investors to question whether the rebound has staying power.

The Automotive Research Association of India approved the Ministry of Heavy Industries’ PLI scheme, making Ola eligible for incentives ranging from 13% to 18% of sales value until 2028. The certification covers all seven models in its Gen 3 range, which accounts for more than half of the company’s sales volume.

“Securing PLI certification for our Gen 3 scooters, which form the bulk of our sales, is a critical step towards profitability. This will directly strengthen our cost structure and margins, enabling us to deliver sustainable growth,” a company spokesperson said earlier this week.

Market share pressures

Still, Ola’s market share has slipped. Data from the Vahan portal show the company sold 13,688 vehicles in the first 27 days of August, translating to a 17.3% market share. This trailed Ather Energy, which overtook Ola with a 17.9% share, while TVS Motor retained the lead at 24.8%. Bajaj Auto slipped to fifth place amid supply disruptions.

“There are both positives and negatives for Ola Electric at this point. The PLI certification is a positive, but the dip in customer confidence is a negative, as they have lost significant market share,” said VG Ramakrishnan, managing partner at Avanteum Advisors LLP, in comments to ET.

Stock performance

Ola shares have fallen 37.4% in 2025 and are down 55% over the past 12 months. The stock remains below its Rs 76 IPO issue price. On Friday, it closed near Rs 54, trading above all eight of its short- to medium-term simple moving averages, though still below its 200-day SMA.

The Relative Strength Index (RSI) stands at 71.2, indicating overbought conditions, while the MACD remains above the centerline, reinforcing a bullish trend.

Analysts on near-term outlook

Mandar Bhojane, senior technical and derivative analyst at Choice Broking, said Ola Electric “has confirmed a breakout and retest of its falling channel and is currently trading near Rs 54. The price structure is constructive, with a series of higher highs and higher lows, supported by strong volumes.” He added that “dips towards Rs 52–50 should be considered healthy corrections and potential buying zones,” while a sustained move above Rs 57 could pave the way to Rs 62 and Rs 70.

Drumil Vithlani, technical research analyst at Bonanza, pointed to resistance at Rs 55–58 and support at Rs 50. “The RSI near 68 suggests the stock is approaching overbought territory, raising the possibility of a short-term pullback or sideways consolidation before attempting another leg higher,” he said.

Anirudh Garg, partner and fund manager at INVasset PMS, said Ola has “broken out of a year-long downtrend with strong volumes, marking an important technical shift.” Garg sees support at Rs 50–52 and resistance at Rs 58–62, with a possible path to Rs 68–70 if the stock closes decisively above that zone.

“The 22% weekly gain has shifted sentiment sharply, but the RSI hovering close to 70 highlights short-term caution,” Garg said.

Financial strains and fundamentals

Ola posted a net loss of Rs 428 crore in the June quarter, wider than a year earlier though narrower sequentially. Revenue halved year-on-year to Rs 828 crore, while gross margin improved to 25.6%. At its first annual general meeting last week, the company secured shareholder approval to reallocate IPO proceeds and extend deployment timelines, citing capital discipline and risk management.

Garg said the PLI certification is a “structural milestone” that strengthens Ola’s margin profile and accelerates the path to EBITDA breakeven, which management expects from Q2 FY26. But he cautioned that incentives alone cannot guarantee success, with execution and market share retention remaining critical.

Industry headwinds and growth bets

The industry continues to face rare earth supply constraints after China tightened export curbs earlier this year. Ola said it has accelerated the development of motors without rare earth magnets. Ramakrishnan of Avanteum Advisors told ET that supply chain issues may soon ease, which could restore balance in the market.

Looking ahead, Ola is banking on new models such as the S1 Pro Sport, S1 Pro+ 5.2 kWh, and Roadster X+ 9.1 kWh, announced at its recent Sankalp event, to drive growth. Deliveries are scheduled to begin later this year and in early 2026.

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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)