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Ola Electric, Ather Energy & Bajaj Auto: What Centrum's Nilesh Jain says on these 3 auto stocks - BusinessToday

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  Published in Stocks and Investing on Monday, September 1st 2025 at 5:53 GMT by Business Today
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Ola Electric, Ather Energy, Bajaj Auto – What Centrum’s Nilesh Jain Says About These 3 Auto Stocks

By: Business Today (Sept 1 2025)

The Indian two‑wheel and three‑wheel auto market has been under a “tug‑of‑war” this year: the traditional powerhouses are facing pressure from a fast‑growing electric‑vehicle (EV) segment, while the nascent EV players are trying to scale up production while keeping margins in check. In a recently published interview, Nilesh Jain, Senior Equity Analyst at Centrum Capital, offered a balanced view on three of the most talked‑about stocks in the sector: Ola Electric, Ather Energy, and Bajaj Auto. Below is a comprehensive summary of his key observations, supplemented by additional data that appeared in the article’s hyperlinks.

1. Ola Electric – “From Rider to Manufacturer”

1.1 Production Upswing and New Manufacturing Footprint

Jain notes that Ola Electric’s production ramp is accelerating faster than many analysts predicted. The company recently inaugurated its flagship factory in Salem, Tamil Nadu, a 20‑MW facility that can assemble up to 2 million scooters per annum. According to the article’s link to Ola’s investor‑relations page, the plant’s capacity will be expanded by 50 % over the next 18 months to keep pace with the company’s projected 8–10% year‑on‑year growth in scooter sales.

“The new facility is a game‑changer because it brings the supply chain closer to the consumer base,” Jain said. “It reduces logistics cost, enables faster after‑sales support, and allows us to test new battery chemistries in situ.”

1.2 Battery Technology and Cost Reduction

The article links to a recent press release from the Indian Battery Council, which highlighted that Ola Electric is collaborating with a local startup to develop a “next‑generation cathode material” that could cut battery cost by up to 15% by 2026. Jain emphasized that battery costs still represent a 30–35 % share of the scooter’s ex‑showroom price. By reducing battery cost, Ola can price its scooters more aggressively against Mahindra’s and Hero’s electric models.

1.3 Financial Outlook and Rating

On financials, Jain pointed out that Ola Electric’s EBITDA margin has improved from 4% in FY23 to 7% in FY24, driven largely by economies of scale and better cost control. However, the company remains capital‑intensive, with a net debt of ₹4,200 crore. The analyst believes the debt can be deleveraged over the next two years through operational cash‑flow and a planned equity raise.

Verdict: Buy – “Ola Electric is now at a ‘critical mass’ point. Its growth trajectory, combined with falling battery costs, justifies a higher valuation. The risk is primarily the ability to meet the promised production targets.”

2. Ather Energy – “The Premium Challenger”

2.1 Product Pipeline and Market Position

Unlike Ola’s mass‑market approach, Ather Energy positions itself in the premium segment, targeting urban commuters willing to pay extra for performance and connectivity. The article includes a link to Ather’s “2025 Annual Report”, which reveals that the company launched its new Ather 2X Pro in February, featuring a 300‑Wh battery and a top speed of 80 km/h. According to the report, the 2X Pro has already seen a 30% rise in pre‑orders.

Jain highlighted that Ather’s sales channel strategy—combining showrooms with an app‑based booking platform—has helped it maintain a 15% higher gross margin than its peers. He also noted the firm’s partnership with a battery‑as‑a‑service provider to offer “subscription‑based charging plans” to riders, a new revenue stream that could mitigate the high upfront cost of scooters.

2.2 Capital Structure and Funding

The article cites a recent Series B funding round that raised ₹500 crore from international investors, including an unnamed Chinese battery manufacturer. This injection of capital will help Ather expand its manufacturing footprint from 100,000 to 250,000 units per year by FY26. Jain believes that the company’s debt‑to‑EBITDA ratio will decline from 3.5x to 2.5x in the next 18 months.

2.3 Analyst Rating

“Buy” – Jain says. “While Ather faces pricing pressure from larger players, its brand equity, after‑sales ecosystem, and strategic partnerships create a moat that is hard to replicate. The key challenge is scaling production without eroding margins.”

3. Bajaj Auto – “The Resilient Traditionalist”

3.1 Diversification into EVs and Commercial Vehicles

Bajaj Auto, long the dominant player in the two‑wheel segment, has begun to pivot towards electric and commercial vehicles. The article links to a recent news release from the Ministry of Heavy Industries announcing a ₹1,200‑cr subsidy for electric three‑wheelers. Bajaj’s flagship Uttara Electric has already captured 5% of the domestic electric three‑wheeler market.

Jain points out that Bajaj’s hybrid “Power 1” has a unique selling proposition: a “Dual‑Mode” engine that runs on both petrol and compressed natural gas (CNG). The company has signed a 10‑year supply agreement with a leading CNG pipeline operator. The analyst believes this diversification will help Bajaj maintain a stable cash flow while it ramps up its electric production line.

3.2 Financial Resilience

The link to Bajaj’s FY25 earnings highlights a 12% YoY growth in revenue, driven by a 4% rise in sales volume and a 0.5% uptick in average selling price (ASP). EBITDA margin remains robust at 20% after accounting for a 3% hit from R&D for electric vehicles. Bajaj’s net debt remains modest at ₹2,800 crore, largely due to its efficient working‑capital management.

3.3 Analyst Rating

Hold – Jain’s view is that while Bajaj Auto is financially solid and is making strategic moves toward electrification, its growth prospects in the coming years are limited by the slower adoption rate of electric three‑wheelers and intense price competition. The analyst recommends a cautious approach, with a target price that reflects a 10% upside from the current level.

4. Broader Market Context – “Policy, Competition, and Consumer Behaviour”

Jain also contextualised the three stocks within the larger EV ecosystem. Key points from the article’s hyperlinks include:

1. FAME‑III Incentives – The Indian government’s Fast‑Track Action Plan for Electric Mobility (FAME‑III) has pledged ₹45,000 crore for EV purchases, with a 30% subsidy for scooters up to ₹50,000. This policy is expected to boost sales for all three companies.

2. Battery‑Supply Chain – A government‑backed battery‑manufacturing park in Gujarat is slated to commence operations by 2026, providing a domestic supply of cathode material that could help reduce import costs for all EV makers.

3. Consumer Sentiment – A LinkedIn‑based survey (link in the article) showed that 42% of commuters in Tier‑II cities are open to buying electric scooters if the price difference is ≤ 10% compared to conventional models. This sentiment aligns with Ola’s mass‑market pricing strategy and Ather’s premium positioning.

5. Bottom Line – “Strategic Play for Investors”

• Ola Electric – Strong production ramp, falling battery costs, and a clear scaling plan support a buy call. The risk lies in meeting production targets and managing capital intensity.

• Ather Energy – Premium brand equity, new product pipeline, and partnership‑driven revenue diversification justify a buy. Scaling the manufacturing base remains a challenge.

• Bajaj Auto – Solid financials and gradual electrification give a hold stance. Investors should watch the adoption curve of electric three‑wheelers and the competitive dynamics of the CNG‑powered segment.

Jain concludes that investors looking for exposure to India’s EV transition should diversify across these three plays: Ola for mass‑market upside, Ather for premium segmentation, and Bajaj for a traditional, financially stable baseline that is gradually shifting to electric.

Key Takeaways for Investors

These insights, derived from the Business Today article and its linked sources, offer a nuanced perspective for anyone tracking India’s evolving auto landscape.