Daybreak - You think Ola Electric is in trouble? You’re not even close

Episode Date: July 15, 2025

On June 23, Ola Electric’s stock crashed to an all-time low of ₹43. This week, the stock staged a brief rebound, jumping nearly 20% in a single session. But at ₹47, it’s still trading far below its IPO price of ₹76 and more than 70% off its post-listing peak.On an earnings call, founder Bhavish Aggarwal insisted the company was on track. With rising margins and tighter cost control, he said, Ola would hit EBITDA break-even at 25,000 units a month.But a closer look at Ola’s financials tells a very different story.For FY25:— Revenue dropped nearly 10%— Losses ballooned over 40%, to ₹2,300 crore— And cash flow from operations? Deeply negative at ₹2,391 crore—nearly 4x worse than the year beforeIn today’s episode, we unpack the growing gap between narrative and numbers at Ola Electric and ask: can Bhavish really steer this ship to safety?Tune in. Check out The Ken's new careers podcast, 90,000 hours: Spotify: https://open.spotify.com/show/5HEi59iUPRMMFfUvxeio47Apple: https://podcasts.apple.com/podcast/90-000-hours/id1826777519Attend The Ken's next event. Details here. 

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Ramon, Ganesh, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production.

Sita and I are still reeling from the intensity of our first studio recording. Intermission launches on March 23rd. To get alert, as soon as we release our first video. episode, please follow intermission on Spotify and Apple Podcasts or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. Hey there, before we begin, if you are building or working on products in any form, you need to hear this. The floodgates are open. AI isn't just transforming the tools used by product managers, designers and engineers.

it is reshaping how products are made, how fast they're built, what teams look like, and who really calls the shots inside companies. On the 26th of July, at the Bangalore International Centre, the Kians Beyond the First Order event returns for its fourth edition. We'll dive into the real, messy and exhilarating transformation playing out inside India's startups and organizations. How are product cycles evolving when AI can write the code, generate ideas and even make decisions, which teams are gaining influence and which ones

are being edged out, what tools are winning and who is resisting. You will hear from some of India's top product minds. Kealash Nad of Zeroda, Swami Deep Mukherjee of Dastun, Akash Anand of Kluso and Siddhu Punapa, founder of the AI-Native startup Real Fast. This time, in addition to the live event, we will also be live streaming it. details about the tickets and the live stream are in the show notes. And now, back to the episode. On June 23rd, Ola Electric stock hit an all-time low, closing at $43 a share. It was the second time in a month that someone offloaded a significant stake in the company through a block deal.

It was clear at the time that the market seemed to be losing faith. This week, though, the stock jumped nearly 20% in a single day, closing around $47. and on paper that's a solid bounce. But let's be honest, it is still far below the IPO price of 76 rupees and over 70% off its post-listing peak. Yet, on the company's earnings call recently, founder Bhawe Shaggawar struck a completely different tone. He insisted that all was well.

Thanks to rise gross margins and cost-cutting measures, OLA would hit EBITA break-even at 25,000 units a month, and that, he said, would put the company firmly on the part to profitability. Well, one look at OLA's financials and the gap between Agarwal's optimism and reality becomes very difficult to ignore. For the year ended March 2025, OLA's sales volumes were down. Revenue? Well, it was down nearly 10% to about 4,600 crore rupees. Losses, meanwhile, well, up over 40% hitting about 2300 crore rupees. One market analyst we spoke to said things could get worse. Its stock price could even drop to zero.

And that's because the company's cash flows have turned precariously negative. In FY25 alone, OLA's cash flows from operation was deep in the red, negative 2,391 crore rupees. That's nearly four times worse than the year before. Why? Well, a combination of mounting operating losses and sales volume that just didn't grow the way the company had hoped. And yet, despite all of this, OLA's management remains confident.

The company's board approved a resolution to raise up to 1,700 crore rupees through non-convertible debentures and other debt securities. The idea is to refinance existing debt obligations. The thing is, it's going to take a lot more than that. Because today, OLA Electric Mobility is finding itself in a deeper hole than ever before. Hello and welcome to Daybreak, a business podcast from the Ken. I'm your host Rahal Philipos and I don't chase the news cycle. Instead, every day of the week, my colleagues Nikda Sharma and I will come to you with one business story that is worth understanding and worth your time.

Today is Wednesday, the 16th of July. You probably remember the headlines when Ola first listed. Bhawish Agarwal proudly declared that the company had intentionally slashed its IPO evaluation. He said he wanted to leave money on the table for public market investors, banking on that classic listing day pop. Well, it popped all right, just not in the direction that he had hoped for. Years of over-promising and under-delivering had finally caught up with Ola. In earlier private fundraisers, the projections were rosy, but reality didn't quite keep up.

So when it came to the list, Ola needed a quick cash boost. The company settled for a 25% valuation cut and spun that as a big win. Bavish called it attractive for public market investors, a word. virtue made out of necessity. But even then, the valuation fell short of what investors had once hoped for. The stock did end up surging right after listing only to crash right after. Today, the company's valuation has dropped from about $4 billion post its IPO to less than $2.5 billion. Ola's also managed to fall far behind its competitors, the likes of TBS Motors and Bajajaj Auto.

It once commanded nearly 50% market share, but today it accounts for just one in five electric two-wheeler's on the road. In the first fortnight of June alone, the company sold about 7,000 vehicles, while TVS and Bajaj collectively sold over thrice as many. In the preceding two months, OLA couldn't clock even 20,000 vehicles. That's slightly lower than the 25,000 monthly units it expects to break even at. The point is, OLA's troubles aren't just piling up. They're accelerating. In early May, ratings agency ICRA downgraded the debt of OLA electronic technologies or OET. That's the company's main operating subsidiary, the one responsible for most of its revenue, operations, as well as its losses.

And that downgrade is only adding to the group's debt troubles. Stay tuned. You will spend 90,000 hours at work over your life. time. Let that sink in for a second because that's more time than you're going to spend with your family or even your closest friends. So the real question is this. How do you make that time count? I'm Rahil Filippos and this is 90,000 hours, a podcast about work and how it's changing faster than ever before. The big question is, are you best in class in your use of AI? And the challenge, by the way, which I will fully address head on, is that the best in class definition,

also changes every single day, almost every single hour. From artificial intelligence replacing entry-level jobs to how the rules of entrepreneurship are fundamentally changing. This show is for anyone trying to stay relevant as the world of work transforms. I've been a founder as well. I've done 75 failed pitches before I got any money for Dr. Baidias. And I didn't like that power dynamic, honestly.

And as a VC, I do my best to break that power dynamics. We are not doing right by our, our students because in school and college, we are teaching stuff that has no relevance to what happens outside. And that means that the system is broken. Join me as I talk to founders, investors, educators and employees, the people rewriting the rules of work to help you make the most of your 90,000 hours. Debuting on 22nd July, new episode every other Tuesday, wherever you get your podcasts. Greetings downgrade has real consequences. It means OLA will likely have.

have to pay higher interest rates on the $195 million it now plans to borrow. And this is in new territory. Between March 2022 and 2024, OLA Electric's borrowings tripled to about $2,400 crore rupees. That's more than its $1,700 crore rupees in cash and bank balances. Then, just before the IPO, the company took on another $700 crore rupees in debt. This time, at much steeper interest rates. we're talking 13 to 14% compared to 9 to 10% earlier. So higher risk, higher cost, and the pressure keeps mounting.

Now, that points to just one thing. A funding gap that urgently needs filling. And OLA Electric Technologies wasn't just borrowing more. According to the company's own IPO documents, it had already breached certain financial thresholds tied to one of its loan agreements. And that's not a great look, especially for a company promising profit just around the corner. Now, that's why OLA wanted to use as much as 800 crore

of the 5,500 crore fresh issue proceeds from its IPO towards repaying its subsidiary's debt. So the plan was clear. A quick public equity issue, even with a sharp cut, to ease the strain and borrowings, even at a high cost, to bridge the gap before that. But cut to March 2025. Ola Electric had about 4,000 crore rupees in cash and equivalents

and around 3,000 crore in debt. Does that sound comfortable? Well, not quite. Of that 4,000 crore rupees in cash, nearly 2,800 crore rupees came from the IPO. And it's not exactly free to use. That money is yearmark for specific purposes, capital expenditure by OLA cell technologies,

research and development, and other organic growth initiatives. And here's the kicker. Despite winning bids to produce advanced batteries under the government subsidy scheme, OLA still has very little to show in terms of actual production. In effect, that's only about

1,200 crore rupees available to service existing debt. The plant, 1,700 crore rupees raised through debt securities, just about covers that gap. But it doesn't take into account OLA's ballooning interest payments. By March 2025, these were

worth 366 crore rupees. That's almost double the previous year. More debt at a higher interest rate will only add to the burden on the company. And that's a burden it doesn't seem ready to bear at the moment. At a negative, 1600 crore rupees, Ola's EBITA went from bad to worse in FY25. Simply put, the heavily loss-making company didn't even make enough money to pay interest on loans last year. A situation that will likely get exacerbated this fiscal year with weak volumes, at least so far. With cash flows from operations likely to remain negative,

Ola seems to have little choice but to raise big debt to keep the show going and stave off potential insolvency proceedings. The fact that Ola is already looking to borrow again, less than a year after its IPO, suggests that the cash crunch is only getting worse. That big public issue, that was a lifeline. But if things don't turn around soon, well, what's going to save the company this time?

Daybreak is produced from the newsroom of the Ken India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters and podcast extras. Head to the ken.com and click on the red subscribe button on the top of the website. Today's episode was hosted by Rahil Filippo's and edited by Rajiv Sien.