Moody’s downgrades ride-hailing firm Ola’s rating; flags risk of covenant breach
Moody’s latest move to downgrade Ola’s rating to Caa1 with a negative outlook sounds like a high-speed brake on the ride-hailing giant’s growth ambitions. Apparently, Ola’s liquidity has hit a pothole due to weakening operating performance, and the looming risk of a loan covenant breach could force the company into an expensive early repayment, turning the smooth ride into a bumpy journey. Between stiff competition and cash burn, Ola’s financial engine is revving low, prompting talk of a potential IPO and stake sales to keep the tank from running dry.
Credit rating agencies like Moody’s play a crucial role in spotlighting financial risks, and this downgrade highlights serious liquidity stresses for ANI Technologies, Ola’s parent firm. With a $65 million loan due in December 2026, the negative outlook reflects the risk that Ola might breach its loan covenants, triggering accelerated repayment. Despite holding about $90 million in cash earlier this year, the company is expected to fall short on debt obligations and capital expenditures through the end of 2026. Ola is reportedly pursuing measures such as selling a stake in Ola Electric Mobility and launching a public offering to bolster liquidity, but these are subject to execution challenges and market conditions, underscoring the precarious financial balancing act the company faces.
