Shares of Ola Electric Mobility will make their Dalal Street debut today, that is, on Friday, August 08. However, India's first-ever pure-play electric vehicle (EV) maker is headed for a bumpy start at the bourses, if one goes by the signals from the grey market, where it has been witnessing a consistent and sharp erosion.
Ahead of its listing, shares of Ola Electric Mobility were exchanging hands at a discount of Rs 3 in the grey market, suggesting a erosion of 4 per cent of the investor's capital. The GMP for Ola Electric Mobility had crashed sharply, following a muted subscription from the investors and volatility in the broader 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.
Ola Electric, a pioneer in the Indian EV space, is set to test investor appetite. The company faces a challenging market sentiment reflected in a discount in the grey market. This underwhelming response follows a moderate subscription of 4.45 times, indicating tepid investor enthusiasm, said Shivani Nyati, Head of Wealth at Swastika Investmart.
"Ola Electric's vision to become a global EV leader, backed by significant investments in R&D and manufacturing, is commendable. Investors will be closely watching the IPO listing to gauge market sentiment towards Ola Electric's business model and valuation. Given the current market conditions and the company's financial performance, a subdued listing is anticipated," she said.
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.
The much hyped IPO of Ola Electric offer received demand well below street expectation. Looking at the subscription figures and mood of the markets, there are very high possibilities of flat to discounted listing, which would be justified on the back of weak financials and risk of negative net cash flows in the past, and future negative cash flows, said Prashanth Tapse, Senior VP (Research) at Mehta Equities.
"We advise only risk taking investors to continue to hold with a minimum holding period of 2-3 years. We recommend risk taking investors to accumulate on every dip to be part of 2-3 years of journey. The long term story is intact but we may see a lot of ups and downs in the short term," he said.
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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