Bumps On IPO Road: Ola Electric’s Net Loss Surges
The Indian manufacturer of electric vehicles (EVs) Ola Electric, led by Bhavish Aggarwal, revealed a significant decline in its financial performance for FY23.
The company's net loss increased dramatically from Rs 784.1 crore in the previous fiscal year (FY22) to an astounding Rs 1,472 crore this year, which is almost a twofold increase.
According to media reports, which cited financial papers, the overall expenses of the company increased significantly to Rs 3,383 crore from Rs 1,240 crore in FY22, coinciding with this concerning spike in losses.
According to the data, FY23 saw an EBITDA loss of Rs 1,318 crore.
However, the company faced a significant increase in its consolidated revenue despite the difficult financial environment, rising 510 per cent to Rs 2,782 crore in FY23.
November saw a 14 per cent month-over-month (MoM) increase in electric two-wheeler registrations, surpassing 85,000 units, due to strong demand for premium electric vehicle (EV) manufacturers throughout the holiday season, as per media reports. Ola Electric continued to hold the top rank, with 27,331 e-scooter registrations in the month, an increase of more than 14 per cent MoM.
With high goals for the future, the organisation wants to take advantage of this momentum. Ola Electric laid out its plan and stated its goal of reaching an EBITDA profitability of Rs 803 crore in FY25 in a note sent to bankers and investors. The company plans to gradually lower its EBITDA losses, with a goal of Rs 950 crore by FY24. It also wants to increase its sales to Rs 4,655 crore by FY24.
The IPO Aspirations And Funding Boost
Even in a difficult financial environment, Ola Electric plans to be listed in 2024 and has scheduled the filing of its draft red herring prospectus (DRHP) with SEBI, the market regulator. According to media reports, Ola Electric is preparing to raise a significant USD 700 million through its first public offering (IPO), to achieve a market capitalisation of USD 10 billion.
Ola Electric has obtained a large financing infusion to strengthen its financial condition and clear the path for a prosperous initial public offering.
In its investment round, Ola Electric raised Rs 3,200 crore (USD 384 Mn) in a combination of debt and equity. The State Bank of India led the debt portion of the deal, while Temasek led the equity portion. Ola Electric is now valued at USD 5.4 billion thanks to inflows, this is a significant increase from its prior estimate of USD 5 billion in January 2022.
The additional funding will help the business attract more investors in preparation for a possible early 2024 IPO. The money might also be used to increase production of the company's recently revealed extensive range of electric bikes, scooters, and possibly even an electric automobile.
Obstacles On The Path Of Growth
Although Ola Electric's growth trajectory appears bright, there are impending problems. Based on USD 335 million in revenue, the company's financial reports for FY22 and FY23 show a significant operating loss of USD 136 million. This performance fell short of the revenue target that was made public, indicating possible difficulties in reaching the projected financial figures.
Ola Electric is aiming to become operationally viable in the near future, and these losses are at loggerheads with the company's preparations for the highly anticipated initial public offering (IPO).
Ola Electric has experienced turmoil in addition to monetary difficulties. Top-level executive departures during a leadership change have affected the company and its electric scooters have been involved in fires, which has made things more difficult as it navigates India's competitive EV market. Additionally, the business let go of a large number of workers in the last year as part of a cost-cutting initiative by the company.
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