Shares of Ola Electric Mobility are set to make their debut at the bourses on Friday, August 08 and India's first-ever pure-play electric vehicle (EV) maker is seen to be headed on a bumpy road, if one goes by the signals from the unofficial market. The grey market premium (GMP) for Ola Electric has been crumbling consistently.
On the back of muted subscription from the investors and volatility in the broader markets, the grey market premium of Ola Electric Mobility has crashed sharply. Last heard, the company was trading at a discount of Rs 3 per share, suggesting a negative listing for the investors later this week. It has been unable to command any significant premium amid the selloff in markets.
Market participants, too, are not very positive on Ola Electric's listing prospect as they believe that profitability for the company remains a key. They see widening of losses, despite a rise in revenue, as a key concern for the company and foresee a discounted debut for the company in the last trading session of the week.
The company is an emerging leader in the electric two-wheeler segment with a rising market share. However, it has been posting losses and may take some more time to turn the corner, said Amit Goel, Co-Founder and Chief Global Strategist at Pace 360. "Due to negative earnings, the issue is priced at a negative P/E. We expect a negative listing and are advised to keep away from the IPO."
The IPO of Ola Electric Mobility was open for bidding between August 2 and August 6, where the pure-play EV player had offered its shares in the fixed price band of Rs 72-76 per share with a lot size of 195 shares. The company raised a total of Rs 6,145.56 crore from its IPO, which included a fresh share sale of Rs 5,500 crore and an offer-for-sale (OFS) up to 8,49,41,997 shares.
The issue was overall subscribed a total of only 4.27 times. The quota for qualified institutional bidders (QIBs) was booked 5.31 times. The quota for non-institutional investors was subscribed only 2.40 times. The portions reserved for retail investors and employees saw bidding for 3.92 times and 11.99 times during the bidding process.
Bengaluru-based Ola Electric Mobility was founded in 2017 and the company is a pure-play electric vehicle player that primarily manufactures electric vehicles and certain core components for electric vehicles such as battery packs, motors, and vehicle frames at the Ola Futurefactory.
Ola Electric Mobility Ltd is all set to list on the bourses on Friday and is expected to list at a discount of 3 per cent its issue price, said Parth Shah, Research Analyst at StoxBox. The company also plans to enter international markets where the EV demand is yet to be fulfilled, he said.
"On account of positive EV market outlook, favourable regulatory environment, large quantum of fresh issue in the IPO, announcement of new models along with the upcoming cell manufacturing unit (Gigafactory), we have a positive view for the company," he added, suggesting investors to hold Ola Electric for a medium to long term perspective.
Brokerage firms had mixed views on the IPO. Some analysts are positive on the company's leadership in the E2W market, focus on EV space, government push and rising culture of EVs. However, they see loss -making nature of the business and rich valuations are the biggest concerns for the issue.
Kotak Mahindra Capital, BofA Securities India, SBI Capital Markets, Axis Capital, Citigroup Global Markets, Goldman Sachs (India) Securities, ICICI Securities and BOB Capital Markets were the lead managers of the IPO, while Link Intime India served as the registrar for the issue. Shares of the company will be listed on both BSE and NSE.
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