Five factors why Ola Electric Mobility shares are up 16% on Monday

Shares of Ola Electric Mobility Ltd. gained as much as 16% on Monday, July 14, after the company reported its quarterly results for the April-June period.

The stock has surged on very high volumes, with close to 30 crore shares of the company being traded, in comparison to its 20-day average of just 2.5 crore shares.

Here are five factors as to why the stock has seen such a sharp surge:

First, the company's results have seen a sequential improvement. Even as the net loss widened from last year, it was narrower than the loss of ₹870 crore that they reported in the March quarter. Revenue may have halved from last year, but increased from the March quarter figure of ₹611 crore. Volumes also improved sequentially.

Second, gross margins have seen an improvement, not only in the June quarter, but the management sees it improving further. Gross margins are likely to improve by nearly 1,500 basis points, also aided by Production Linked Incentives (PLI) benefits.

Third, the company's Auto segment delivered on its guidance for the quarter and turned positive on an Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) basis. The management also said that the auto segment cash generation is within reach.

Fourth, the company's full-year EBITDA margins are seen at 5%, in comparison to the negative 11.6% margin it reported during the June quarter.

Lastly, the stock has been beaten down significantly, not just from its post-listing high, but also from its IPO price. At the start of trade on Monday, the stock was down 48% from its IPO price of ₹76 per share, and 75% lower than its post-listing high of ₹157.

Shares of Ola Electric Mobility are trading 15.4% higher on Monday a ₹45.93.