Ola Electric Mobility kicks-off its initial public offering (IPO) for bidding today, that is, Friday, August 2 and the three-day bidding will conclude on Tuesday, August 6. The electric vehicle (EV) maker is offering its shares in the price band of Rs 72-76 apiece, where investors can apply for a minimum of 195 shares and its multiples thereafter.
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 Rs 6,145.55 crore-IPO of Ola Electric includes a fresh share sale of up to Rs 5,500 crore and offer-for-sale (OFS) of up to 8,49,41,997 shares by its promoters and existing shareholders including Promoter Bhavish Aggarwal and Indus Trust, along with Alpha Wave Ventures, Alpine Opportunities Fund, Internet Funds III, MacRitchie Investment, Matrix Partners India and more.
The net proceeds from the fresh issue shall be utilized towards capital expenditure to be incurred by its subsidiary, OCT for expansion of the capacity of its cell manufacturing plant; repayment or pre-payment, in full or part; investment into research and product development; expenditure to be incurred for organic growth initiatives; and general corporate purposes.
Ola Electric allotted 36.4 crore shares to anchor investors to mop up Rs 2,763 crore at a price of Rs 76 per share. Anchor book included names like Government Pension Fund Global, Nomura India Investment, Goldman Sachs (Singapore), and Fidelity along with SBI Mutual Fund (MF), HDFC MF, Nippon India MF, Sundaram MF, Bandhan MF, Bharti Axa Life Insurance and more.
Since August 2021, Ola Electric has launched seven new products and announced four. The Ola S1 Pro, the first EV model, was delivered in December 2021, followed by the Ola S1, Ola S1 Air, Ola S1 X and Ola S1 X+ in the following years. On August 15, 2023, the company announced new EV models and a range of motorcycles including Diamondhead, Adventure, Roadster, and Cruiser.
The company operates its omnichannel distribution network across India, comprising 870 experience centers and 431 service centers, in addition to the Ola Electric website, as of October 31, 2023. In FY 2023, around 75 per cent of 2W exports from India were destined for Africa, LATAM, and South East Asia, while the domestic supply of E2W was limited.
Ola Electric reported a net loss of Rs 1,584.40 crore with a revenue of Rs 5,243.27 crore for the financial year ended on March 31, 2024. The company's net loss stood at Rs 1,472.08 crore with a revenue of Rs 2,782.70 crore in the fiscal year 2022-23. Anchor book for the issue will open for bidding on Thursday, August 1.
The company has reserved shares worth Rs 5.5 crore for the eligible employees of the company, who will get a discount of Rs 7 per share in the issue. 75 per cent for the net offer has been reserved for qualified institutional bidders, while non-institutional investors will get 15 per cent of the net offer. Retail investors will have only 10 per cent of the net offer allocated for them.
Kotak Mahindra Capital, BofA Securities India, Axis Capital, SBI Capital Markets, Citigroup Global Markets India, Goldman Sachs (India) Securities, ICICI Securities and BOB Capital Markets are the lead managers of the IPO, while Link Intime India is the registrar for the issue. Shares of the company will be listed on both BSE and NSE likely on August 9, Friday. Here's what a host of brokerage firms say about the IPO of Ola Electric:
Anand Rathi Research Rating: Subscribe with caution Ola Electric has significant headroom to grow in coming years led by favourable market conditions, regulatory norms and the higher capacity utilization of Ola Futurefactory. They commenced manufacturing the 4680-form factor cells at the Ola Gigafactory in March 2024 which is expected to allow better control over battery and EV quality, supply, and costs, said Anand Rathi Research.
"Despite being a loss making entity company has gained market share of 34.8 per cent in E2W segment. The company is valued at marketcap/sales of 6.6 times with a market cap of Rs 33,522 crore post issue of equity shares. We believe that the company is richly priced," it added with 'subscribe for long term' rating to the IPO with a higher risk appetite.
Geojit Financial Services Rating: Subscribe with caution As a leader in the E2W segment, the company is in a strong growth phase with robust R&D, a broad product portfolio, and a vertically integrated approach. Benefiting from government incentives and a scalable model, OEML is well-positioned to leverage India’s EV market and explore international opportunities, said Geojit Financial Services.
"Ola Electric's EV/sales ratio of 7.2 times (FY24) appears expensive. Despite current profitability challenges and valuation concerns, we recommend a 'subscribe' rating for high-risk investors with a long-term outlook," it said.
Swastika Investmart Rating: Neutral Ola Electric Mobility is developing vertically integrated manufacturing and technological capabilities for EVs and their component parts, such as cells. Regarding financial performance, the company has reported a loss for each of the last three fiscal years. The company’s Heavy investment in R&D may not give a return in the immediate future, said Swastika Investmart.
"Due to high competition, it may face downward pricing pressure with that company’s employee attrition rate being too high. Its top line has been growing annually, its bottom line has improved due to lower losses. Undoubtedly, more time will be needed to turn the corner and eliminate the losses. We have a neutral position on this IPO in light of these reasons," it added.
Arihant Capital Markets Rating: Subscribe for listing gains Ola's margins are expected to improve post integration of its in-house cell since it will be saving on the margins of the companies from which it imports batteries. Cell PLI will come when commercial production starts and it will also get 13-18% PLI on production of 2 models of electric scooters, said Arihant Capital Markets.
Ola is the market leader with 50 per cent market share in electric 2Ws as of April 2024. We believe that if the EV story sustains and drives demand, Ola could be one of the biggest beneficiaries. Ola’s battery business can have more potential that its scooter business since surplus capacity after captive consumption could be deployed for various uses, it said with a 'subscribe' rating.
Hensex Securities Rating: Subscribe Ola Electric Mobility is the largest E2W seller in India by number of units registered in Fiscal 2024, with scalable platform-based design and development approach, direct to customer omnichannel distribution model and eligibility for EV-related government incentives leading to cost advantages, enables the company to position itself well in a dynamic market, said Hensex Securities.
"However, the company is in its investment phase, and consequences thereof have reported net losses and negative cash flows. With the shift in consumer preference towards EV the company exhibits great potential ahead. We recommend a 'subscribe' to the issue with listing Gains as well as for long Term Investment perspective, it said.
StoxBox Rating: Subscribe "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 from a medium to long term perspective. We, therefore, recommend a 'subscribe' rating for the issue," it said.
AUM Capital Rating: Subscribe "Electric Vehicles are gaining importance in the overall auto industry given India's goal is to reach net zero carbon emissions by 2070. Post Covid, two wheelers, especially the E2W have found a place of interest as well as importance amongst the consumers," said AUM Capital.
"Ola Electric with the largest market share in this category has grown by leaps and bounds since being introduced 5 years back. Backed by a strong R&D team, integrated operations and products variety makes it stand out in the competition. We would hence recommend a 'subscribe' to the issue," it said.
Kunvarji Wealth Solutions Rating: Subscribe Ola Electric is operating in the growing market which will shape the future of green transportation in the nation. Hence the demand is anticipated to rise for EV products from Bike to Battery Cells where the company expected to prove its stand with inclusive and 360 degree growth, said Kunvarji Wealth Solutions.
"We recommend 'susbcribe' to this IPO with the view of long-term investment as near term volatility is expected till bottom-line growth stabilizes. The debt burden of the company is likely to reduce gradually and expected to contain the bottom line from losses," it added.
Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.