Financials
Financials — What the Numbers Say
1. Financials in One Page
Olectra is a small-cap Indian electric-bus OEM (FY2025 revenue ₹1,802 Cr, ~$211M) that has compounded revenue at a 41% CAGR over the last seven years off a tiny base. Operating margin recovered from −9% in FY2019 to 15% in FY2025 as the e-bus mix scaled and the loss-making FY2018–FY2020 commissioning phase faded. Cash conversion, however, is fragile: free cash flow has been negative in five of the last eight years, and a fresh capex super-cycle (capital work-in-progress went from ₹4 Cr in FY2023 to ₹207 Cr by Sep-2025) is being funded with rapidly rising debt (borrowings ₹366 Cr, up ~5x in three years). The market is pricing the order book and the new plant, not the trailing print: at P/E ~73x and P/B ~9.3x, the stock sits ~26% below its FY24 peak but still trades at consensus FY26 growth of ~+47% revenue and +50% PAT. The single financial metric that matters most right now is working-capital intensity (debtor + inventory days), because it determines whether the next ₹2,000+ Cr of capex actually converts into free cash.
TTM Revenue (₹ Cr)
Operating Margin (TTM %)
ROCE FY2025 (%)
P/E (TTM)
Market Cap (₹ Cr)
Price / Book
How to read this page. Section 2 explains revenue and margins. Section 3 stress-tests whether earnings turn into cash. Section 4 shows what the rapidly expanding balance sheet implies. Sections 5–6 cover capital allocation, returns, and segment quality. Section 7 frames valuation. Section 8 compares with peers. Section 9 ends with the watch metrics.
2. Revenue, Margins, and Earnings Power
How big and how fast
Olectra's reported income statement covers two segments — composite polymer insulators (the legacy ~9% business) and electric buses (>90%, the growth engine). Revenue inflected with the FAME-II e-bus order cycle from FY2022 onwards.
Two things matter in this chart. First, the absolute scale tripled in two years (FY2023→FY2025). Second, operating profit grew faster than revenue (a 7.4x lift in 5 years against 6.4x for revenue), so the business is finally getting operating leverage instead of just topline growth.
Margin structure: from loss-making to mid-teens
The 2,400 bp swing from a 9% operating loss in FY2019 to a 15% operating profit in FY2025 is the single most important earnings-quality fact about Olectra. It tells you the e-bus platform is now scale-economic — fixed costs (assembly line, R&D, BYD technology fees) are spread across far more buses. The catch: net margin is only ~8% because interest expense has grown alongside borrowings (₹66 Cr in FY2025 vs ₹6 Cr in FY2017).
Recent quarterly trajectory — momentum is real but lumpy
The quarterly cadence is volatile because the company's revenue is tied to delivery acceptance under state-transport contracts, not steady consumer demand. Q2 of every fiscal year has been the strongest (Q2 FY2025 ₹524 Cr; Q2 FY2026 ₹657 Cr); Q1 and Q4 are seasonally weaker. The latest two quarters (Q2/Q3 FY2026) at ₹657/₹664 Cr signal that revenue has stepped to a new plateau ~25–35% above the prior peak. Operating margin has held steady at ~14% through the ramp — encouraging — but the FY2025-Q4 dip to 12% is a reminder that mix shifts (more low-margin AC city buses vs higher-margin coach variants) move the line.
Insight. The earnings-power story is genuine: revenue base is 11x larger than seven years ago, operating margins have moved from negative to mid-teens, and recent quarterly run-rate (₹650+ Cr) implies a new annualised baseline of ~₹2,500–2,700 Cr — already ahead of FY2025's full year. But every rupee of incremental sales has historically required ~₹1.10 of incremental working capital. Section 3 quantifies why that matters.
3. Cash Flow and Earnings Quality
Free cash flow — the term
Free cash flow (FCF) is the cash a business generates from operations after paying for the capital expenditure (capex) needed to keep and grow the asset base. FCF = Operating Cash Flow − Capex. A company can report a profit while burning cash if customers pay slowly (rising receivables) or if it must build inventory and a factory faster than it earns. Olectra is exactly that case.
Net income vs operating cash flow vs free cash flow
Three patterns to read here:
- FY2018–FY2020 (build phase): Profits modest, OCF deeply negative, FCF burned ₹550 Cr cumulatively. Working-capital build to support new e-bus delivery contracts.
- FY2021–FY2022 (first cash year): OCF turned strongly positive (₹209 Cr in FY2021) as receivables were collected. The company finally generated free cash — modest, but real.
- FY2023–FY2025 (re-leveraging phase): Profit growth is real (₹67→₹139 Cr) but FCF averages roughly zero because working capital and capex are both running hot. FY2025 FCF was negative ₹36 Cr despite ₹139 Cr of net income — the gap was eaten by capex of ~₹177 Cr (OCF ₹141 Cr minus FCF −₹36 Cr).
Cash conversion is structurally worse than the P&L
A reader should not be lulled by the FY2025 print of 101%. The series average over eight years masks the real story — the OCF/NI ratio has swung between −1,564% and +2,612% because working-capital movements dominate. For Olectra, profit and cash are weakly correlated within any given year; you must look at trailing 3-year cumulative cash conversion to make sense of it. On that basis, FY2023–FY2025 cumulative OCF was ₹274 Cr vs cumulative net income of ₹285 Cr — a 96% conversion ratio that, at face value, is healthy. The catch: cumulative FCF over the same window was −₹47 Cr because every rupee of OCF (and then some) is going into the new factory.
Where the cash is going
| Distortion | FY2025 (₹ Cr) | Implication |
|---|---|---|
| Capex (OCF − FCF) | ~177 | New Hyderabad plant; FY2026 capex will be larger |
| Investing cash outflow | -225 | Includes capex + investments held |
| Financing inflow | +83 | Borrowings funding the gap |
| Net cash flow | -1 | Steady-state — not building cash |
| Debtor days (FY2025) | 140 | Long but improving from 162 in FY2024 |
| Inventory days | 79 | Down from 96 — better demand visibility |
| Cash conversion cycle | 38 days | Best in the dataset since FY2014 |
The cash conversion cycle figure (38 days) is the most encouraging single number on the page: state-transport buyers — who used to pay Olectra in 200+ days — are paying faster, partly because of structured payment guarantees baked into PM E-Drive and gross-cost-contract (GCC) tender designs.
Caveat. FY2025 FCF was negative even though OCF roughly matched net income. The reason is capex, not earnings quality. If FY2026 capex prints ₹400–600 Cr (consistent with the ₹207 Cr CWIP balance moving to plant assets plus a fresh build wave), expect another year of negative FCF — not because the business is broken, but because the business is still being built.
4. Balance Sheet and Financial Resilience
What the balance sheet looks like today
The leverage and capex chart that matters most
This is the chart that should change a reader's view of the stock. Borrowings have 5x'd in three years, while capital work-in-progress (CWIP — assets being built that are not yet productive) has expanded from ₹4 Cr to ₹207 Cr.
This is not a balance sheet getting weaker — it is a balance sheet getting deployed. The CWIP-to-borrowings ratio is broadly 1:1, which means debt is funding tangible plant, not working-capital losses. Once the Hyderabad plant capitalises (the company commenced operations in January 2026 per management announcements), CWIP will roll into productive fixed assets and depreciation will rise. The risk: if delivery ramp from the new plant lags demand, the company will be carrying interest cost on idle capacity.
Liquidity, leverage, and coverage
Interest coverage at 4.3x (TTM) is comfortable but no longer "fortress" — three years ago the ratio was effectively limitless because debt was negligible. Borrowings/Operating profit at 1.29x is benign on its own; the concern is the trajectory rather than the absolute level. The company carries an ICRA A-/A2+ "Stable" credit rating (last reaffirmed mid-2022 — re-confirmation expected); below investment grade in international terms but acceptable for an Indian mid-cap with strong order visibility.
Working-capital efficiency is improving
Debtor days have come down from 658 in FY2020 to 140 in FY2025 — a structural improvement that mirrors better state-transport payment behaviour. Inventory days have normalised to ~80. The cash conversion cycle of 38 days in FY2025 is back to where it was in the polymer-insulator-only days of FY2014–FY2015. This is the most genuinely positive operational data point in the file.
5. Returns, Reinvestment, and Capital Allocation
Return on Capital Employed (ROCE)
ROCE measures how much operating profit a business generates per rupee of total capital it employs (debt + equity). It is the single most important profitability metric for an industrial business because it answers: is this management creating value on the money they put to work?
ROCE compounded from 2% in FY2020 to 21% in FY2025 — a striking turnaround. Importantly, ROCE has improved while the asset base has expanded, which is the cleanest evidence that management is reinvesting capital intelligently. The risk going forward is denominator inflation: when CWIP (currently ₹207 Cr non-productive) capitalises into operating assets, ROCE will mathematically compress unless utilization on the new plant ramps quickly.
Capital allocation — where is the cash going?
Three capital-allocation truths:
- Olectra reinvests almost everything. Capex has run ~100–125% of OCF for three consecutive years. The dividend payout is token (₹3 Cr/year, ~2% payout ratio).
- Buybacks: zero. Share count is unchanged at 8.21 Cr (82.08M) shares — there has been no equity issuance since FY2018's QIP and no buyback. EPS growth therefore tracks net-income growth one-for-one.
- The third capital source is debt. Borrowings are funding the gap between capex and operating cash. This is rational while the order book is loaded; it becomes risky if order flow stalls.
Per-share trajectory
EPS at ₹16.92 (FY2025) and ₹17.42 (TTM) is the basis for the current valuation discussion in Section 7.
6. Segment and Unit Economics
The disclosed financials in data/financials/segment.json are not broken out at the segment level (the data probe failed). From the FY2025 annual report and management commentary, the implied split is:
| Segment | FY2025 share | FY2025 revenue (₹ Cr) | Notes |
|---|---|---|---|
| Electric Vehicles (e-buses) | ~91% | ~1,640 | Growth driver; volatile by quarter; FAME-II/PM E-Drive linked |
| Composite Polymer Insulators | ~9% | ~160 | Legacy business; steady; competes with Apar Industries |
The e-bus segment carries the equity story — it is the only segment with order visibility (₹1,800 Cr TGSRTC LoA in Feb-2026 + ~₹1,800 Cr Evey Trans subsidiary order) and the segment that justifies the ₹207 Cr CWIP build. The insulator segment is profitable but small and not why investors own the stock. Until detailed segment financials are filed in the FY2026 annual report, treat consolidated financials as a near-proxy for the e-bus business.
7. Valuation and Market Expectations
What the multiple tells you
P/E (TTM)
Price / Book
EV / TTM Sales
Current Price (₹)
Available Target (₹)
At ~₹1,271 the stock prices a future business, not the current one. Three lenses:
- Versus history. Stock P/E peaked above 200x in early 2024 when EPS was ~₹9 and price was ~₹2,000. EPS has roughly doubled since, while price is down ~35% from that peak. So the market has compressed the multiple from triple-digit to high-double-digit while earnings have done the work. That is healthier than it looks.
- Versus growth. Trendlyne consensus FY26 estimates: revenue +47%, PAT +50%. If achieved, FY26 EPS lands at roughly ₹26 — implying a forward P/E of ~49x, well above India's auto-OEM median (~25–35x) but defensible if growth continues.
- Versus cash. P/FCF is meaningless when FCF is near zero. EV/Sales at ~5.1x is the cleanest non-earnings comparison, and it is higher than every peer in the table below.
Implied bear/base/bull scenarios
The base case lines up with the current price (~₹1,271–1,300) — meaning the market is paying for FY26 consensus to land roughly on plan. The visible target available in research from Trendlyne is ₹1,732 (a single-analyst datapoint, not a full consensus). Geojit shows recommendation history with targets between ₹738 (accumulate) and ₹2,086 (buy) — a wide range that reflects how thin sell-side coverage is on this name.
Valuation conclusion. The stock is not cheap on any historical or peer-relative metric. The premium is justified only if FY26 lands consensus (+47% revenue, +50% PAT) and the new plant ramps into a higher-margin order book without working-capital relapse. Any of those three slipping would push the multiple toward 30–40x P/E — implying ~₹540–800, a 30–55% drawdown scenario from ₹1,271.
8. Peer Financial Comparison
Read the table this way:
- Olectra is the smallest business on the list (₹2,117 Cr revenue), trading at the highest P/E (73.0x) and the second-highest P/B (9.3x).
- Its ROCE (21%) is in the middle of the peer range — better than Ashok Leyland and JBM Auto, worse than Eicher Motors, Force Motors, and Apar Industries.
- Its operating margin (13%) is below most peers (especially Eicher's 24% and Ashok Leyland's 19%).
- Its revenue base is ~25x smaller than Ashok Leyland and ~10x smaller than Apar Industries.
The premium can only be defended by growth — which is the consensus view (+47% FY26 revenue is not in any peer's expectation set). It cannot be defended by margins, ROCE, or cash conversion, all of which sit middle-of-pack.
The bubble chart makes the gap visible: at OLECTRA's 21% ROCE, the median peer P/E should sit ~30–35x. At 73x, Olectra is paying ~2x what comparable returns command — the gap is the growth premium.
9. What to Watch in the Financials
What the financials confirm and contradict
The numbers confirm: revenue scale is genuinely 11x larger than seven years ago; operating margins have moved structurally from negative to mid-teens; ROCE has tripled in three years; working-capital efficiency is at decade highs; and management is reinvesting almost all cash back into the business.
The numbers contradict the bull case in two places. First, free cash flow has been negative or near-zero in five of the last eight years — this is not a cash compounder, it is a capital-consuming growth story. Second, the valuation premium (P/E 73x, P/B 9.3x) is at the top of the peer set despite mid-pack returns and below-pack margins. The market is paying for a growth path, not for what has already been delivered.
The first financial metric to watch is the working-capital cycle (debtor days + inventory days vs payable days), because it is the lever that determines whether the next ₹600–800 Cr of annual capex translates into free cash flow or into another funding gap that must be plugged with debt. If FY2026 closes with debtor days at or below 130 and the cash conversion cycle inside 30 days, the valuation premium has support. If debtor days re-expand to 180+ as state-transport buyers slow payments under fiscal pressure, the 73x multiple is hard to defend.