Ola Electric IPO Fully Subscribed On Day Two, Sees Strong Retail Interest

Ola Electric's initial public offering (IPO) has been fully subscribed by the second day of its bidding process. The issue saw a huge response with bids for 49.43 crore shares against the 46.51 crore shares on offer, translating to a subscription rate of 1.06 times the issue size. 

The IPO was 35 per cent subscribed on the first day and attracted significant interest from retail individual investors (RIIs), whose reserved quota was subscribed 2.87 times. Non-institutional investors (NIIs) subscribed to the issue 1.11 times, while the allocation for qualified institutional buyers (QIBs) was 40 per cent booked.

The IPO consists of a fresh issue of Rs 5,500 crore and an offer for sale (OFS) of 8.4 crore shares. Under the OFS, founder Bhavish Aggarwal will offload 37.9 million shares, while key investors such as Alpha Wave, Alpine, DIG Investment, Matrix and others will sell a total of 47.89 million shares. 

Ahead of the IPO opening, Ola Electric raised over Rs 2,700 crore from anchor investors, including prominent names like Nomura, HDFC Mutual Fund and SBI Mutual Fund.

Priced in the range of Rs 72-76 per share, the IPO values the company at a market cap of just over Rs 33,500 crore at the upper end, with a market cap-to-sales ratio of 6.6x. This valuation is competitive when compared to top global automobile entities, which trade between 1-8x on the same metric. 

Interestingly, Ola Electric's last funding round in September, which was led by Singapore's investment firm Temasek, had valued the company at over Rs 48,000 crore, indicating a downward adjustment in its current valuation.

Ola Electric, a leading player in India's electric two-wheeler market, has seen its revenue from operations soar to Rs 5,009.8 crore in fiscal 2024, up from Rs 2,630.9 crore in fiscal 2023. This growth is primarily driven by increased sales of its Ola S1 and Ola S1 Pro scooters and the commencement of deliveries of the Ola S1 Air and Ola S1 X+ in fiscal 2024. Despite the impressive revenue growth, the company reported a higher loss of Rs 1,584.4 crore in fiscal 2024, compared to a loss of Rs 1,472 crore in the previous fiscal year.

The company's vertically integrated technology and manufacturing capabilities are a significant strength, producing not only electric vehicles but also core components such as battery packs, motors, and vehicle frames at its Ola Futurefactory. Since August 2021, Ola Electric has delivered seven products and announced four new ones, solidifying its position in the market.

The IPO is managed by an array of prominent bankers, including Kotak Mahindra Capital, Citigroup Global Markets India, BofA Securities India, Goldman Sachs (India) Securities, Axis Capital, ICICI Securities, SBI Capital Markets and BOB Capital Markets.