Moody’s Investors Service has cut the credit rating of ANI Technologies, the parent company of ride-hailing platform Ola, and shifted its outlook on the company to negative, citing weakening financial performance, tight liquidity and an increasing risk that the company could breach key loan covenants.
The downgrade to Caa1 reflects what Moody’s describes as “ongoing weakness” in Ola’s operations that is eroding its liquidity position and pushing up the probability of a covenant breach in the coming months.
Why Moody’s Moved: Weak Earnings, Rising Refinancing Risk
According to Moody’s, ANI Technologies’ operating cash flows have declined, while refinancing risks are rising on account of slower revenue growth and continued losses.
The agency notes that Ola’s earnings before interest, tax, depreciation and amortisation (EBITDA) remain weak, limiting its ability to comfortably service its debt. This combination of subdued earnings and higher refinancing risk has been central to the decision to cut the rating and maintain a negative outlook.
Moody’s also underlines that the company continues to operate in a “highly competitive mobility market” while shouldering costs related to expansion and technology investments, adding to financial pressure.
The Covenant Question: A $65 Million Loan and Cash Requirements
At the core of Moody’s concerns is a set of loan covenants attached to a $65 million facility that falls due in December 2026.
Loan covenants are additional agreements between a borrower and lender that define what a company must or must not do. A breach is treated as a technical default and can trigger an event of default or accelerate repayment.
In Ola’s case, Moody’s points out that one covenant requires the company to maintain cash equivalent to 40% of the outstanding loan, which translates to at least $26 million. A failure to meet this threshold could speed up repayment of the loan and tighten liquidity further.
Liquidity Squeeze Despite a $90 Million Cash Buffer
As of March 2025, Ola held around $90 million in cash, Moody’s notes. On the surface, that appears to be a substantial buffer relative to the minimum cash covenant of $26 million.
However, Moody’s warns that this pool of cash is not enough when measured against the company’s total debt service obligations and capital spending requirements through December 2026.
The agency adds that available cash and equivalents may not be sufficient to cover upcoming debt maturities and operational expenses, making liquidity a key challenge.
This is why, despite the headline cash number, Moody’s still sees a “growing likelihood of a loan covenant breach” and has kept the outlook negative.
Competitive Heat: Market Share Loss to Rapido
Financial pressures are compounded by intensifying competition in India’s urban mobility market.
Moody’s highlights that Ola has been losing market share to Rapido, an urban mobility start-up that is currently raising funds for expansion. Even with backing from heavyweight investors such as Z47 (formerly Matrix Partners India), SoftBank, Temasek and Tiger Global, Ola faces tough competitive dynamics in its core ride-hailing business.
Ola’s Response: IPO Talk and Ola Electric Stake Sale
To shore up liquidity, Ola is exploring a set of strategic options. Moody’s notes that the company is considering:
- A possible initial public offering (IPO), and
- The sale of its 3.64% stake in Ola Electric Mobility, which is publicly listed.
Both moves could unlock additional funds, but Moody’s cautions that these plans are subject to execution and market risks. There are currently no committed credit facilities or alternative refinancing arrangements, which, in Moody’s view, keeps the likelihood of some form of debt restructuring high over the next 12 months.
What Moody’s Says Ola Must Do
Moody’s stresses that stabilising Ola’s credit profile will require a combination of operational and financial discipline. The ratings agency says the company will need to:
- Improve financial discipline,
- Strengthen operating margins, and
- Secure more predictable funding sources.
The agency also indicates that the negative outlook will remain in place unless the company’s performance and cash generation improve in the coming quarters.
While Moody’s action is squarely focused on ANI Technologies, it sends a broader signal about the economics of app-based mobility in India. Ola’s downgrade comes despite a sizeable cash balance, marquee investors and efforts to diversify into electric vehicles.
The central message from the rating action is clear: in a hyper-competitive market, sustained losses, weak cash generation and covenant-heavy borrowing structures leave even large platforms vulnerable to rapid rating deterioration and refinancing stress.
For now, Moody’s downgrade places Ola under a sharper spotlight. How the company manages its loan covenants, liquidity and strategy over the next year will determine whether this rating cut is a temporary setback or the start of a more prolonged period of financial restructuring.
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