Moody’s Ratings has downgraded ANI Technologies Pvt Ltd (Ola) to Caa1 from B3, citing weakening operations, high cash burn, and the rising risk of default. The outlook remains negative.
Why Did Moody’s Downgrade Ola?
According to Moody’s Assistant Vice President and Analyst Sweta Patodia, the downgrade reflects Ola’s continued operating weakness and the possibility of a loan covenant breach in the coming months. The company’s poor cash flow has increased refinancing risks and reduced financial flexibility.
Key Facts About Ola’s Downgrade
- Ola’s corporate family rating (CFR) and its guaranteed senior secured loan have both been cut to Caa1.
- The downgrade concludes the review initiated on August 29, 2025.
- Ola must maintain cash equal to 40% of its outstanding $65 million loan – at least $26 million – to avoid covenant breach.
- Cash reserves fell from $90 million in March 2025 due to higher-than-expected losses and operating expenses.
- The $65 million term loan is due in December 2026.
Ola’s Financial Pressure and Refinancing Challenge
Moody’s highlighted that India’s ride-hailing market competition continues to squeeze Ola’s profitability. The company will likely face more cash burn over the next year and will need to depend on external funding to refinance its debt.
Ola is exploring multiple options to raise funds — including a potential IPO and the sale of its 3.64% stake in Ola Electric Mobility Ltd, estimated at around $90 million. However, both options face execution and market challenges.
Liquidity Position: Weak but Assets Could Help
Moody’s rated Ola’s liquidity as weak. The company’s current cash levels are insufficient to meet debt and capital needs until the end of 2026. Ola’s 3.64% share in Ola Electric could provide temporary relief if sold.
What Could Improve Ola’s Rating?
The rating could stabilize if Ola successfully:
- Refinances its $65 million term loan on time.
- Stops cash burn and improves operational efficiency.
- Restores adequate liquidity on its balance sheet.
What Could Lead to Another Downgrade?
Moody’s could downgrade Ola further if:
- The company fails to refinance or restructure its debt obligations.
- Any liability management move results in losses for lenders or resembles default avoidance.
Analyst’s View
“The downgrade to Caa1 and negative outlook reflects the ongoing weakness in Ola’s operating performance that is eroding liquidity and raising the risk of a covenant breach in the coming months,” said Sweta Patodia, Assistant Vice President and Analyst at Moody’s Ratings.
Summary
Moody’s latest downgrade signals growing concern over Ola’s financial health. The company’s future now depends on its ability to raise fresh funds, refinance its debt, or monetize assets like its Ola Electric stake. Without urgent capital measures, Ola risks a potential default within the next year.
Source: Moody’s Ratings | Compiled by BigBreakingWire Finance Desk
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