Whalesbook
Indian EV Bus Market Surges
India's electric bus market is rapidly expanding, a key part of the country's move towards greener transport. The market is projected to grow from an estimated $1.41 billion in 2026 to between $2.4 and $2.9 billion by 2030, increasing by about 14-20% annually. By FY26, electric buses accounted for roughly 4.5% of total bus sales, a major jump that shows a clear shift from diesel engines. This growth is supported by government programs like FAME II and PM e-Bus Sewa, offering subsidies. Electric buses also offer a lower overall cost compared to diesel ones. The wider bus market is expected to exceed pre-COVID sales levels by the end of FY26, with electric buses predicted to make up about 13% of sales by FY28.
Olectra Greentech: Orders Rise, Profits Squeezed
Olectra Greentech, a major Indian EV bus maker, is taking advantage of this market expansion. The company recently won significant orders totaling ₹1,800 crore for 1,085 electric buses from Telangana and ₹497 crore for 297 buses from Himachal Pradesh. Olectra is also increasing its production capacity at its Seetharampur plant in Telangana to meet this demand. However, winning many orders has put pressure on its profits. In Q3 FY26, revenue rose by ₹115 crore to ₹664 crore, but net profit stayed flat at ₹47 crore. This is due to rising costs for batteries and other parts, as well as the expenses of producing and scaling up for large orders. Its stock valuation, with price-to-earnings (P/E) ratios between 50x and 70x, indicates high market expectations, but profits are struggling to keep pace. Despite an analyst downgrade due to technical issues, Olectra's focus solely on EVs and its large order book position it for high growth, though with higher risks.
Ashok Leyland: Stable Growth in EVs
Ashok Leyland, a maker of various commercial vehicles, is taking a more balanced approach to the EV market. Through its subsidiaries Switch Mobility and OHM Global Mobility, the company has made notable progress. Switch Mobility sold 1,466 electric buses in FY26, securing a 24.8% market share in the e-bus sector and outselling rivals. Ashok Leyland's existing commercial vehicle operations provide a stable financial foundation, allowing investments in its EV division without risking overall profits. The company is also expanding its EV production with a new plant in Lucknow, set to build 2,500 buses annually, with plans to double this capacity. Additionally, OHM Global Mobility has won orders in the European market. Ashok Leyland's stock valuation, with P/E ratios typically between 26x and 37x, seems more realistic compared to companies focused only on EVs. Analysts generally recommend a 'Buy', with average price targets around ₹200-₹205, showing confidence in its operational execution and steady growth potential, despite a debt-to-equity ratio of 4.08.
Competition Heats Up; Investor Choice
The Indian electric bus market is getting more crowded. Besides Olectra and Ashok Leyland, companies like PMI Electro Mobility Solutions, JBM Auto, and Tata Motors are competing for market share. PMI Electro was the largest seller by volume in FY26. JBM Auto reported strong revenue growth and profitable EV operations. Tata Motors is also expanding its electric bus fleet and winning orders.
For investors, deciding between Olectra Greentech and Ashok Leyland depends on their tolerance for risk. Olectra could offer higher growth from its EV focus and large orders, but this comes with a higher stock valuation, risks in fulfilling orders, and profit challenges. Ashok Leyland offers a more stable investment. Its strong commercial vehicle business supports a careful expansion into EVs, providing a financial buffer to handle market changes and achieve steady long-term growth, even if its EV expansion is not as rapid. Investors should closely watch order fulfillment, profit margins, and government support in this fast-changing market. Ashok Leyland is set to announce its Q4 FY26 results on April 25, 2026.