Ola Electric: Next Tesla or Next Paytm?

Summary

The video discusses the financial performance and challenges of various companies, including Naka, Trik, Nykaa, Paytm, and Ola Electric. It highlights the stock performance after listing, the struggle of companies like Nykaa and Paytm to reach profitability, and Ola Electric's market competition and financial hurdles. The speaker emphasizes that profitability is key to sustaining stock prices and company growth. Additionally, the video covers Bhavish Aggarwal's ambitious expansion plans for Ola Electric, pointing out the risks involved due to high competition, capital intensity, and declining sales figures in the electric scooter market.

Takeaways

• 📈 The stock prices of three companies, including Naka and Trik, doubled shortly after their listing, but Nykaa has struggled to reach its listing price.
• 🎯 Ola Electric's future profitability depends on selling 2.2 million scooters, but the company is currently falling short of this target with only 350,000 scooters sold in the last financial year.
• 💡 Ola is aiming to capture 50% of the Indian scooter market, but competition from companies like TVS and Bajaj is increasing rapidly.
• 🔋 Ola's production capacity is currently 1 million electric scooters annually, but they are selling only a fraction of that, raising concerns about underutilization of resources.
• 💸 High competition in the electric scooter market is a challenge for Ola, and the company's debt is rising, with interest payments growing from ₹18 crore to ₹187 crore in just two years.
• ⚠️ TVS is emerging as a strong competitor in the electric scooter market, selling 192,000 units compared to Ola's 350,000, and is seen as a potential market leader by UBS Securities.
• 🚗 Ola's ambitious plans to expand into electric cars and bikes, as well as battery manufacturing, may strain the company’s resources without immediate profitability.
• 📉 Bajaj's electric scooter sales have grown significantly, from 1,300 units in 2021 to 115,000 units in 2024, showing the rapid market shift.
• 💼 Despite CEO Bhavish Aggarwal’s fast execution, his diverse ventures have yet to yield profitability, and Ola's multiple business streams, including its app and finance arm, remain in losses.
• 🧮 Ola's path to profitability is uncertain, with underperforming sales, rising debt, and intensifying competition from well-established players like TVS and Bajaj.

Q & A

What is the common factor between the three companies mentioned in the video?

The common factor is that the share prices of all three companies doubled shortly after their listing. However, Nykaa has not yet reached its listing price, unlike the others.

Why did Nykaa's stock price fail to reach its listing price?

Nykaa is still struggling and has not reached its listing price due to challenges in the business, likely related to profitability and market conditions.

What key announcement was made during the Ola SanKalp event?

Bhavish Aggarwal announced the launch of the Ola Roadster e-bike and the company's plans to manufacture battery cells in India, with reduced costs due to government import duty cuts on raw materials.

What was the impact of Bhavish Aggarwal's announcements on Ola Electric's stock price?

Following the announcements at the SanKalp event, Ola Electric's stock hit the upper circuit and saw a price increase of 20%.

What does Professor Aswath Damodaran's prediction regarding Paytm's valuation reveal?

Professor Damodaran predicted that Paytm's fair valuation was around $20 billion, expecting it to become profitable within two years with positive free cash flow. However, Paytm continued to record losses, leading to significant value destruction.

What challenges does Ola Electric face in becoming profitable?

Ola Electric needs to sell 22 lakh scooters to break even. The company's current production capacity is underutilized, selling far fewer units than the 10 lakh it can manufacture. Additionally, increased competition from other brands, like TVS and Bajaj, makes it difficult for Ola to maintain its market share.

What is the state of competition in the electric scooter market in India?

The electric scooter market is becoming increasingly competitive, with companies like TVS and Bajaj significantly growing their sales. TVS sold 1,92,000 e-scooters last year, while Bajaj sold 36,000 e-scooters in 2023. This growing competition puts pressure on Ola Electric to maintain its market share.

What financial challenges is Ola Electric facing?

Ola Electric operates in a capital-intensive market with increasing borrowings. Its interest payments have grown from ₹18 crore to ₹187 crore in just two years, and the company continues to report operating losses.

What were Bhavish Aggarwal’s production capacity goals, and how do they compare with the actual performance?

Bhavish Aggarwal aimed to increase Ola's production capacity to 2 million e-scooters annually, eventually expanding to 10 million. However, the company currently sells only around 3.5 lakh scooters, far below its capacity of 10 lakh units.

What is one of Bhavish Aggarwal’s strengths and weaknesses as mentioned in the video?

His strength lies in fast execution, making decisions and implementing them quickly. However, a weakness is a lack of focus, as he jumps into multiple business ventures without ensuring profitability in one before moving to the next.