Vanguard, the prominent asset management firm based in the United States, has significantly slashed Ola’s valuation to $1.25 billion, as revealed in a recent SEC filing. This drastic reduction marks an astonishing 80% drop from its former valuation of $7.3 billion back in 2021.

Ola’s Declining Valuation

In February 2022, Vanguard first placed Ola’s worth below the $2 billion threshold, estimating it at $1.88 billion. Later in November, the valuation was slightly adjusted back up to around $2 billion. However, the latest reevaluation underscores ongoing challenges for the ride-hailing giant.

Market Dynamics Shifting

Ola has struggled to maintain its footing in the competitive ride-hailing market. Recently, Rapido has surged ahead, establishing itself as the market leader by expanding its services from bike taxis to auto rickshaws and cabs. As a result, Ola has now dropped to the third position, trailing behind both Rapido and Uber.

In August 2022, CEO Bhavish Aggarwal announced a strategic rebranding of Ola Cabs to Ola Consumer. This move aims to unify its diverse offerings, including financial services, cloud kitchens, and electric logistics. Despite transitioning to a public entity in November 2022, Ola has yet to make significant moves towards an initial public offering (IPO).

Financial Performance Overview

In the fiscal year 2024, Ola reported a 5.5% decline in operating revenue, dropping to ₹2,012 crores from ₹2,128 crores the previous year. However, the company managed to substantially reduce its losses, reporting only ₹10 crores in losses compared to ₹623 crores in FY23. Notably, Ola achieved Ebitda profitability for the first time in FY24. Last year, the company exited all international markets, including the UK, Australia, and New Zealand.

Competitor Insights

Rapido reached unicorn status last year after securing $200 million in funding, bringing its valuation to $1.1 billion. The Swiggy-backed company has outperformed Ola in combined daily rides across all its service offerings.

Despite the drop in market share, Ola’s ride-hailing revenue remains robust. In FY24, Ola generated ₹1,761 crores in revenue, which is more than double Uber’s ₹807 crores and 2.5 times that of Rapido, which reported ₹648 crores in revenue while reducing its losses by 45% to ₹371 crores.

Conclusion

As Ola navigates through these turbulent waters, the future remains uncertain. With fierce competition and a shifting market landscape, it is crucial for the company to innovate and adapt to reclaim its position in the ride-hailing sector. The coming months will be pivotal in determining Ola’s trajectory in this dynamic industry.