ICRA Downgrades Ola Electrics Debt Rating Amid Sluggish Sales And Profitability Challenges

New Delhi: Ratings company ICRA Limited has downgraded the debt ranking of Ola Electric Mobility Limited’s automobile unit because of slower-than-expected gross sales and a difficult highway to profitability. The company diminished the ranking of 4 debt tools of Ola Electric Technologies Private Limited from ‘A’ to ‘BBB+’ and maintained a unfavorable outlook, bringing up the corporate’s behind schedule gross sales expansion in electrical two-wheelers.

ICRA contended that Ola Electric has struggled to ramp up its electrical two-wheeler gross sales, main to better money burn and pushing again the corporate’s trail to profitability. As a consequence, the corporate might wish to lift further price range within the subsequent 12 to 24 months as its present money reserves proceed to fritter away.

In April, Ola Electric’s per 30 days gross sales hit their lowest stage for the reason that corporate went public in August ultimate 12 months. Sales dropped via 42 consistent with cent year-on-year (YoY) to only 19,709 gadgets. Over the similar length, the corporate’s marketplace proportion additionally fell sharply via 31 share issues, right down to 21 consistent with cent.

This slowdown contrasts with the efficiency of competition like Bajaj Auto, TVS Motor Co., and Ather Energy, whose electrical two-wheeler gross sales grew via 151 consistent with cent, 152 consistent with cent, and 31 consistent with cent, respectively, in the similar period of time.

ICRA highlighted the intensifying festival within the electrical two-wheeler marketplace. Established avid gamers like Bajaj Auto and TVS Motor Co. have considerably larger their marketplace proportion, shooting round 40 consistent with cent of the marketplace, up from simply 7 consistent with cent in FY22.

This rising festival has put additional drive on Ola Electric’s gross sales. The slower gross sales and declining marketplace proportion are anticipated to affect the corporate’s profits. ICRA forecasts a lack of Rs 1,900-2,000 crore for Ola Electric in FY25, a bigger loss in comparison to Rs 1,600 crore in FY24.

However, the company believes profitability pressures might ease in FY26 and past, with new product launches, reminiscent of a third-generation scooter and a brand new bike, anticipated to spice up revenues. These new merchandise are in response to a not unusual platform, which might boost up expansion and profitability.

Ola Electric may be increasing its gross sales community, with the selection of gross sales touchpoints anticipated to develop to 4,000 via March 2025, up from simply 900 in March 2024. The corporate may be ramping up its provider infrastructure to deal with previous provider problems, which will have to assist toughen buyer pride.

However, in spite of those efforts, the corporate faces important demanding situations. Ola Electric has encountered difficulties with its fast enlargement.

Many of its retail outlets have been running with out right kind industry certificate, and buyer lawsuits associated with provider and product high quality are nonetheless often showing on social media.

Additionally, the corporate has needed to prolong the supply of its Ola Roadster X bike for the second one time in two months.

Furthermore, the corporate is dealing with scrutiny from a couple of central ministries and India’s marketplace regulator, including to the drive.

However, ICRA warns that if gross sales proceed to fall quick, Ola Electric could also be pressured to discover additional fundraising choices, which might introduce investment dangers.

Nevertheless, the company believes that the corporate has enough capability to boost further price range, if wanted.