Ola Electric IPO meet takeaways: Outlook promising; scooters, battery biz 2-3 years away from breakeven

Prabhudas Lilladher, which attended Ola Electric's IPO meet, said the Bhavish Aggarwal-led company 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. 

The domestic brokearge said while Ola Electric's business outlook and growth prospects look promising, its journey towards profitability could be a key thing to look at. "We believe its scooters and battery business are 2-3 years away from breakeven and sustainable profitability," PL said. 

PL said as battery accounts for 30-40 per cent of material cost, Ola Electric is in the process of developing its own battery cell, which it aims to integrate in its scooters by FY26. With the integration of its own battery cells, Ola Electric would focus on improving the margin profile along with operating leverage, PL said.

At present, the penetration of EV scooters in scooters stands at 15 per cent, which Ola Electric believes can increase upto 35-40 per cent by FY30, PL added.

The Ola Electric IPO would include a fresh share sale of up to Rs 5,500 crore and offer for sale (OFS) of up to 8,49,41,997 equity shares by its promoters and existing shareholders amounting to Rs 645.56 crore at the upper end of the price. The IPO will open on August 2.

Ola Electric aims to utilise Rs 1,200 crore towards the expansion of its Gigafactory capacity. Currently, the facility is in the testing phase of 1.5GwH and by April 2025 it aims to commission the phase 2 with a capacity of 5GwH and further scale it up to 20GwH capacity in the next few years, PL said.

As a part of its consistent development of products, Ola Electric will be investing Rs 1,600 crore towards Research and Development while it will utilise Rs 800 crore towards debt repayment and Rs 350 crore towards organic business expansion mainly for its scooters business.

Ola Electric said it may continue to incur operating losses in the near term as it invests in business and expands product portfolio, build capacity and scale operations. 

The expansion of product portfolio, including the introduction of Ola S1 Pro, Ola S1 Air, the Ola S1 X+, Ola S1 X (2 kWh), Ola S1 X (3 kWh) and Ola S1 X (4 kWh) and Ola's strategy of expanding sales footprint across international automotive markets, could result in an increase in operating costs, it said. 

"Ola Electric foresees healthy addressable for its products in regions like Asia, LATAM and Africa which it could look to cater to in the long term. The company is part of PLI for scooters business as well as battery business which shall aid in mitigating some of the costs," PL said.

Meanwhile, Ola Electric was in news earlier today as a media report suggested the parent company of MapMyIndia, which has 30 years of expertise in building digital maps in India, has filed a lawsuit against the IPO-bound firm, saying that the ride aggregator copied its proprietary data to build its own Ola Maps.