Ola Electric IPO Fully Subscribed on Day Two, Attracts Strong Investor Interest
The initial public offering (IPO) of Ola Electric has garnered full subscription on the second day of its bidding process, following a 35% subscription on the first day. The issue received bids for 49,43,85,840 shares, amounting to 1.06 times the issue size of 46,51,59,451 shares. The retail individual investor (RII) quota was notably oversubscribed at 2.87 times, while the non-institutional investor (NII) category saw a subscription rate of 1.11 times. Qualified institutional bidders (QIBs) booked 40% of their allotted shares.
Grey Market Premium and Offer Details
Market analysts report that Ola Electric’s current grey market premium (GMP) stands at Rs 4-6 (approximately 5%) in the unlisted market. The IPO consists of a fresh issue worth Rs 5,500 crore and an offer for sale (OFS) of 8.4 crore shares. Under the OFS, founder Bhavish Aggarwal will sell 37.9 million shares. Investors including Alpha Wave, Alpine, DIG Investment, and Matrix will also divest 47.89 million shares.
Ahead of the IPO, Ola Electric successfully raised over Rs 2,700 crore from anchor investors, including Nomura, HDFC Mutual Fund, and SBI Mutual Fund.
Analyst Perspectives on Ola Electric IPO
Many analysts have a positive outlook on the IPO, citing Ola Electric’s leadership in the domestic electric two-wheeler market as a significant advantage. LKP Securities recommends subscribing to the IPO, emphasizing the growth potential driven by the increasing penetration of electric scooters, which currently stands at 15%. The firm believes Ola Electric is well-positioned to benefit from positive developments in the electric vehicle (EV) sector.
Anand Rathi’s analysts also support a subscription, highlighting Ola Electric’s growth prospects supported by favorable market conditions, regulatory norms, and increased capacity utilization at the Ola Futurefactory.
Pricing and Valuation
Ola Electric has set the IPO price band between Rs 72 and Rs 76 per share. At the upper end, this pricing values the company at a market cap-to-sales ratio of 6.6x, with a total market capitalization of over Rs 33,500 crore. For comparison, top global automotive companies trade within a market cap-to-sales range of 1-8x. Notably, Ola Electric’s valuation was adjusted downward in its last funding round in September, led by Singapore’s investment firm Temasek, which valued the company at over Rs 48,000 crore.
Company Overview
Ola Electric is a dominant player in India’s electric two-wheeler sector, boasting the highest revenues among all EV two-wheeler manufacturers in the country. The company is developing vertically integrated technology and manufacturing capabilities for EVs and core EV components, such as battery packs, motors, and vehicle frames, at its Ola Futurefactory.
Since its first product announcement in August 2021, Ola Electric has launched seven products and announced four additional ones. The company’s revenue from operations surged to Rs 5,009.8 crore in fiscal 2024, up from Rs 2,630.9 crore in fiscal 2023, primarily due to increased sales of the Ola S1 and Ola S1 Pro scooters, and the introduction of the Ola S1 Air and Ola S1 X+.
Despite this growth, Ola Electric reported a loss of Rs 1,584.4 crore in fiscal 2024, compared to a loss of Rs 1,472 crore in the previous fiscal year.
Key Issue Managers
The IPO is managed by several prominent banks, 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.
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