On August 2, Ola Electric’s IPO will open for retail investors, marking a significant milestone for the Indian EV industry as the largest EV offering to date.
👉🏻 The company has set a price band of ₹72-76 for its upcoming initial public offering (IPO), which will open on August 2 and close on August 6.
Here is what you need to know about India’s largest EV offering to date.
💰 IPO Valuation
- Targeted Fundraising: Rs 5,500 crore (~USD 700M)
- Valuation Goal: $4.2 to USD 4.4 billion
- IPO Components:
- Fresh issue worth Rs 5,500 crore
- Offer-for-sale of Rs. 8.5 crore equity shares
- Valuation Context:
- 18%+ discount to the last private funding round (valued at USD 5.4 billion by Temasek in 2023)
- Influencing Factors: Cooling Indian equity market valuations and decreased government support for E2W
📊 Capital Allocation
How will the Rs 5,500 crore (~USD 700M) be used?
- Research and Development (R&D): ~29% | Rs 1,600 crore
- Focus: Building a fully integrated eMobility business, addressing software and hardware challenges
- Corporate: ~28% | Rs 1,540 crore
- Capital Expenditure (CAPEX): ~22% | Rs 1,226 crore
- Objective: Expand cell manufacturing plant capacity from 5 GWh to 6.4 GWh (scheduled to start production in March 2024)
- Debt Repayment: ~14% | Rs 800 crore
- Strategic Acquisitions/Inorganic Growth: ~6% | Rs 350 crore
- Rationale: Market conditions have created opportunities for strategic acquisitions
🏭 Operating Metrics
- FY2024 Operating Revenues: Increased 93% to Rs 5,010 crore (~USD 603 million)
- Net Loss: Increased 6% to Rs 1,478 crore (~USD 178 million)
- Cost Control Efforts:
- Significant cost control measures
- Layoffs: Approximately 500 workers earlier this year
🥧 Market Share
- E2W Sales: 329,000 units in FY2024 (115% YoY growth from FY2023’s 153,000 units)
- Market Share: Maintained a dominant 45-50% share in the competitive E2W market (As of July 29, Ola Electric held a 39% market share for the month in the electric two-wheeler market with competitors like Bajaj, TVS Motors, and Ather increasing their share of sales, Source portal Vahan)
- Main Competitors: TVS, Bajaj, Ather
Key Takeaways
The company’s ambitious strategy to invest significantly in R&D, CAPEX, and strategic acquisitions highlights its commitment to leading the eMobility sector. With a fully integrated business model and notable market share growth, Ola Electric demonstrates substantial potential for future success.
As the Indian government continues to support the EV ecosystem, Ola stands to benefit from significant tailwinds as the leader in the nation’s fastest-growing mobility category.
