Am trying to value OLA Electric, as Prof Aswath Damodaran says you can value any company by developing story.
1. The Story of OLA Electric
- Current Position : OLA Electric is currently a leader in the electric scooter (EV) market in India.
- Future Growth : It aims to expand leadership into the electric bike segment.
- Global Ambitions : Eventually, OLA plans to sell electric vehicles (EVs) globally.
- Battery Cell Advantage : While the revenue from battery cells is not directly considered, having an in-house battery cell supply could help OLA achieve higher margins due to cost savings.
2. Market Assumptions
- Two-Wheeler Market Size in India (2024) : 1.8 crore (18 million) units.
- Growth Rate of the Market : Expected to grow at 8% annually.
- Market Size in 2030 : With 8% annual growth, the total market is projected to be around 2.8 crore (28 million) units.
3. Electric Vehicle (EV) Penetration
- EV Market Share by 2030 : Projected at 40% of the total market, which is approximately 1.10 crore (11 million) EV units. Some industry reports predict an even higher market share.
4. OLA Electric’s Market Share Projections
- Domestic Market : Assuming OLA captures 33% of the EV market in India, this would equate to 36 lakh (3.6 million) units by 2030.
- Export Market : Assuming OLA captures 25% of the export market, this would be an additional 9 lakh (0.9 million) units.
- Total Sales Volume : Combining both, OLA’s total sales volume in 2030 would be 45 lakh (4.5 million) units.
5. Revenue Projections
- Average Selling Price : If the average price per unit is ₹1 lakh, the total revenue would be: 45 lakh units×₹1 lakh=₹45,000 crore
6. Profit Margin and Earnings
- Profit Margin Assumption : Assuming a profit margin of 10%, the profit would be: ₹45,000 crore×10%=₹4,500 crore
- Shares Outstanding : With 441 crore shares of OLA, the Earnings Per Share (EPS) would be: ₹10
7. Valuation and Price Prediction
- Price-to-Earnings (PE) Ratio : Assuming a PE ratio of 40 in 2030, the projected stock price would be: ₹10 EPS×40=₹400 vs CMP of ₹120.
Disc: Invested (as indicated in earlier post) and views are biased
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