Ola Electric Mobility is set to launch its initial public offering (IPO) on Friday, August 2 and the issue can be subscribed till Tuesday, August 6. Ola Electric is among the top electric vehicle (EV) player in the country in terms of revenue and it is India's first pure play EV primary offering. It is building vertically integrated technology and manufacturing capabilities for EVs and EV components.
OLA Electric IPO shall be offered in the fixed price band of Rs 72-76 with a minimum bid for 195 equity shares and its multiples thereafter to raise nearly Rs 6,146 crore. The issue includes a fresh share sale of Rs 5,500 crore and offer for sale (OFS) of up to The issue is a combination of fresh issue of 8.49 crore shares worth Rs 645.56 crore.
While the losses continue to remain concerns for the analysts, brokerage firms continue to be positive on the company's leadership in the EV market and management's vision to become a single-stop EV solution provider. On the valuation front, the issue appears to be full price and policy volatility, delay in EV cell plant and a few more factors that may cap investors' interest.
Ola, being the market leader in the domestic EV 2W industry, stands at deriving benefit of any positive development in it. The vision to become a one stop shop for EV industry by providing the cutting-edge technology, state of the art infrastructure including the battery manufacturing should augur well for the future growth, said LKP Securities in its IPO note.
"We are cognizant of the fact that it is running into losses at the operating level itself, though the extent of loss margins is reducing. The company has won PLI for a couple of its top-selling models and also for its battery manufacturing unit. This shall assist Ola to improve their profitability in the ensuing years," it said.
Array of new launches with EV bike launches next year should enable the company to retain their market share. Higher volumes are expected to bring in operating leverage thus reducing losses, which we believe can happen in mid-term. Reduction in battery costs should also help the cause. We believe Ola to run the tide being the only pure play 2W EV, LKP said with a 'subscribe for long term rating.
The Bengaluru-based Ola Electric Mobility, founded in 2017, is an electric vehicle company that primarily manufactures electric vehicles and certain core components for electric vehicles such as battery packs, motors, and vehicle frames at the Ola Futurefactory.
The company is part of PLI for scooters business as well as battery business which shall aid in mitigating some of the costs. Ola Electric has created a strong position for itself in the electric scooters market and is in the process of making itself as one of the key players in the battery business in India, said Swarnendu Bhushan, Co-Head of Research at Prabhudas Lilladher
"While the business outlook and growth prospects look promising, its journey towards profitability could be a key thing to look at as we believe its scooters and battery business are 2-3 years away from breakeven and sustainable profitability," he said highlighting company's vision to cater markets of Asia, LATAM and Africa in the long term.
The grey market premium (GMP) for Ola Electric Mobility has remained range bound since the announcement of the issue, with no major movement seen. Last heard, Ola Electric was commanding a grey market premium of Rs 15.50-16 per share, which is about 22 per cent higher from the upper end of its price band.
The company is in a high growth phase with volumes/revenue growing at a CAGR of 297 per cent and 266 per cent over FY22-24, said SBI Securities. "However, it is yet to report profit at the Ebitda and the PAT level as it is still in the investment phase and undertaking substantial capex. Ola Electric is currently valued at 6.7 times FY24 P/S at the upper price band," it said.
Early teen gross profit margin in FY24 and PLI approval for 2 of its scooters started accruing since January 2024 comfort. FAME III policy incentive will be a key trigger to watch out for the E2W segment, said an IPO note from InCred Equities. Management expects EV2W sales to reach 41-56 per cent penetration by FY28 from 4.5 per cent in FY24, it said.
"Cut in IPO valuation to $4 billion ease valuation risk at 6.8 times FY24 sales versus global EV peers at 3-8 times CY23F," InCred added. "We are constructive on IPO, however, quarterly volatility from policy, EV cell plant delay penalty risk and regular PE share sale to limit stock price gains. EV cell production success can extend an option value of Rs.7-10 per share."