Ola Electric IPO grey market premium crashes 75%; retail portion booked 2.6x on Day 2 so far

The initial public offering (IPO) of Ola Electric Mobility continued to see a muted response from the investors during the second day of the bidding process amid the sell-off in the broader markets. The issue kicked-off for bidding on Friday, August 02 and ended the first day of the bidding with merely 35 per cent subscription.
 

Ola Electric Mobility is selling its shares in the price band of Rs 72-76 apiece. Investors can apply for a minimum of 195 shares and its multiples thereafter. It is looking to raise Rs 6,145.56 crore via IPO, which includes a fresh share sale of Rs 5,500 crore and an offer-for-sale (OFS) of 84,941,997 equity shares.
 

According to the data, the investors made bids for 33,27,23,040 equity shares, or 72 per cent, compared to the 46,51,59,451 equity shares offered for the subscription by 1.20 pm on Monday, August 05. The three-day bidding for the issue will conclude on Tuesday, August 06.
 

The allocation for retail was subscribed 2.61 times, while the portion reserved for non-institutional investors (NIIs) investors saw a subscription of 81 per cent. Portion for employees was booked 8.38 times. However, the quota set aside for qualified institutional bidders (QIBs) quota was to see any significant bids as of the time.
 

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 grey market premium (GMP) of Ola Electric has taken a big hit amid the rising volatility in the broader markets, denting the bidding sentiments. Last heard, the company was commanding a premium of only Rs 4 in the unofficial market, suggesting a listing pop of about 5 per cent for the investors. However, the GMP market stood at  Rs 16 when the IPO was announced.
 

Brokerage firms have 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.
 

Considering the FY24 Sales of Rs 5,010 crore, Ola Electric is going to list at a mcap-to-sales of 6.69 times with a market cap of Rs 33,522 crore, whereas its peers namely TVS Motors, Eicher Motors, Bajaj Autoand Hero MotoCorp  are trading at mcap-to-sales of 3.02 times, 8.24 times, 5.95 times and 2.86 times respectively, said Marwadi Financial Services.
 

"We assign 'subscribe' rating to this IPO as the company is the largest Pure EV player with a leadership position in the fast-growing Indian E2W market. Also, it is available at reasonable valuation considering the future growth potential of the company," said the brokerage firm in its IPO note.
 

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. 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.
 

Ola Electric is a prominent player in India's electric vehicle sector, focusing on vertically integrated technology and manufacturing for EVs and components, including battery cells. It manufactures EVs and key components such as battery packs, motors, and vehicle frames at the Ola Futurefactory and the new Ola Gigafactory for advanced EV cell manufacturing, said Canara Bank Securities.
 

"On account of the positive EV market outlook, favourable regulatory environment, the announcement of new models, and the upcoming cell manufacturing unit, we have a positive view of the company from a long-term perspective. We recommend to 'subscribe' the IPO for long-term gains," it said.
 

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.
 

BofA Securities India, Axis Capital, Kotak Mahindra 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.

 

 

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