Executive Summary

Investment Thesis

Olectra Greentech Ltd., a pioneer in India's electric vehicle industry, is strategically positioned to capitalize on the rapid growth of the electric bus market. With a robust order book, strong government support, and strategic partnerships, the company is poised for significant revenue and profitability growth. However, potential risks related to execution, competition, and financial management should be considered.

Key Investment Highlights

Market Leadership in Electric Buses

• Net order book of 10,818 electric buses.
• Contracts with state transport undertakings and private entities like Microsoft.

Strategic Partnership with BYD Auto

• Extended cooperation agreement until 2030.
• Enhances technological capabilities and product development.

Strong Revenue Growth

• 45% YoY increase in consolidated revenue to ₹313.9 crore in Q1 FY'25.
• Management expects to double deliveries in the next quarter.

Aggressive Capacity Expansion

• Plans to ramp up production to 5,000 buses/month by year-end.
• Targeting over 10,000 buses/month in FY'26.

Government Support and Industry Tailwinds

• Benefits from policies like FAME II promoting EV adoption.
• Environmental concerns drive demand for electric transportation.

Valuation and Recommendation

Based on DCF analysis and relative valuation, the intrinsic value per share is estimated under three scenarios:

Buy Scenario

• Intrinsic Value per Share: ₹2,250
• Upside Potential: Approximately 32%
• Assumptions: 35% annual revenue growth, EBITDA margins improving to 20%.

Hold Scenario

• Intrinsic Value per Share: ₹1,725
• Upside Potential: Minimal
• Assumptions: 25% annual revenue growth, EBITDA margins improving to 18%.

Sell Scenario

• Intrinsic Value per Share: ₹1,025
• Downside Risk: Approximately 40%
• Assumptions: 20% annual revenue growth, stable EBITDA margins at 16%.

Current Market Price: ₹1,700 per share

Target Price and Upside Potential

Considering the analysis, a Hold stance is suggested with a target price of ₹1,725 per share. The current market price appears to fairly reflect the company's intrinsic value, balancing growth prospects with potential risks. Investors are advised to monitor the company's progress in executing expansion plans and managing operational challenges.

Disclaimer: This executive summary is based on analysis and projections using available data. Actual results may differ due to market conditions and unforeseen factors. This summary is for informational purposes and does not constitute investment advice.