The initial public offering (IPO) of Ola Electric Mobility opened on 02 August to invite subscription from the public market for its over Rs 6,000 crore initial public offering (IPO).
The Rs 6,145.56 crore IPO consisted of fresh issues of up to Rs 5,500 crore and an offer-for-sale (OFS) worth Rs 645.56 crore by promoter and investor selling shareholders.
The EV player fixed the price band for the issue at Rs 72 to 76 per share. Retail investors can bid for a minimum of 195 equity shares and in multiples of 195 equity shares thereafter. The minimum capital required for the one lot is Rs 14,820.
Timeline
The IPO opened on 02 August and scheduled to close on 06 August followed by the allotment on 07 August. Subsequently the IPO will list on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) on 09 August.
Kotak Mahindra Capital Company, Citigroup Global Markets India, BofA Securities India, Goldman Sachs (India) Securities, Axis Capital, ICICI Securities, SBI Capital Markets, and BOB Capital Markets are the book running lead managers and Link Intime India is the registrar to the offer.
Analyst Note
“At the upper price band of Rs 76, Ola Electric EV/sales ratio of 7.2 times (FY24) appears expensive. However, as a leader in the E2W segment, the company is in a strong growth phase with robust R&D, a broad product portfolio, and a vertically integrated approach. Despite current profitability challenges and valuation concerns, we recommend a ‘Subscribe’ rating for high-risk investors with a long-term outlook,” stated Geojit Financials.
“Higher volumes are expected to bring in operating leverage thus reducing losses, which we believe can happen in mid-term. Reduction in battery costs should also help the cause. Therefore, based on the narrative of EV proliferation in the country we believe Ola to run the tide being the only pure play 2W EV. Therefore, keeping an eye and a cautious view on the demand and thereby the reduction in losses for Ola, we recommend to ‘Subscribe’ this IPO with a long term perspective,” stated LKP Securities.
IPO Objectives
The proceeds of Rs 5,500 crore from the fresh issue will be utilised towards capital expenditure of its subsidiary, OCT for expansion of the capacity of its cell manufacturing plant.
Additionally the funds will also be used for prepayment or scheduled repayment of a portion of certain outstanding borrowings availed by the company and general corporate purposes.
Moreover, the firm will also get benefits on listing in the public market which will enhance the brand’s visibility and provide liquidity to the shareholders.
Firm’s Financials
The firm registered revenue of Rs 5,243 crore in FY24, compared to Rs 2,782 crore in FY23.
However, the firm’s profit after tax (PAT) decreased to Rs 1,584 crore in FY24 compared to Rs 1,472 crore in FY23.
Overall, revenue increased by 88.42 per cent, whereas PAT fell 7.63 per cent.
Notably, the company is running into losses at the operating level itself, though the extent of loss margins are reducing (25.3 per cent in FY24 from 47.6 per cent in FY23).
