Ola Electric IPO subscribed 28% on Day 1 so far; retail portion fully booked

The initial public offering (IPO) of Ola Electric Mobility saw a muted response from the investors during the first day of the bidding process. The issue, which kicked-off for bidding on Friday, August 02, was mostly subscribed by retail investors, whose portion was fully subscribed.
 

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 12,82,68,075 equity shares, or 28 per cent, compared to the 46,51,59,451 equity shares offered for the subscription by 2.20 pm on Friday, August 02. The three-day bidding for the issue will conclude on Tuesday, August 06.
 

The allocation for retail was subscribed 1.28 times, while the portion reserved for non-institutional investors (NIIs) investors saw a subscription of only 13 per cent. Portion for employees was booked 4.14 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 of Ceigall India has taken a big hit amid the rising volatility and muted bidding on day one. Last heard, the company was commanding a premium of Rs 12.20 in the unofficial market, suggesting a listing pop of about 15-16 per cent for the investors. However, the premium in the grey market stood around Rs 18-20, when the price band was announced.
 

Brokerage firms have a mixed views on the IPO. Some analysts are positive on company's leadership in E2W market, focus on EV space, government push and rising culture of the EVs. However, they see loss making nature of the business and rich valuations are the biggest concerns for the issue.
 

Ola electric is the leader of rapidly growing market with a 35 per cent share, but intense competition may limit profitability in the near term, potentially keeping the company loss-making. Meanwhile, Hero's recent investment in Ather Energy values the company at 3.2 times FY24 sales, significantly lower than Ola's valuation of 6.9 times, said Nirmal Bang Securities.
 

"While Ola's market leadership, faster growth and investment in cell development productions we do believe Ola deserves premium valuations over Ather, Its current valuation appears high, so we recommend subscribing to the issue for long-term," it added.
 

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.
 

As India focuses on reducing its carbon footprint and enhancing energy security, Ola Electric’s IPO could be a pivotal development in the green mobility space. With a 35 per cent market share in India’s electric two-wheeler market in FY24, Ola Electric sold 3.29 lakh units in FY24, more than doubling its sales from the previous year, said Master Capital Services.
 

"IPO not only showcases Ola Electric’s growth and market leadership but also highlights the potential of the EV sector. Investors are encouraged to subscribe to this IPO with a Medium to Long Term view," it added.
 

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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