Ola Electric Mobility is set to launch its initial public offering (IPO) on August 2, 2024. This eagerly awaited IPO aims to raise ₹6,145.5 crore, potentially making it the largest IPO of 2024 in India. The price band for the IPO is set at ₹72-76 per share. This article is guidance for our students doing a share market course. They should apply after reviewing the article below.
IPO Overview
Ola Electric, a leader in the electric vehicle (EV) sector, plans to issue 5.1 crore fresh shares and 84.94 lakh shares through an offer for sale (OFS), each with a face value of ₹10. The funds raised will be allocated primarily for cell manufacturing, research and development (R&D), and debt repayment, with around ₹5,500 crore earmarked for these purposes. The remaining proceeds will be used for general corporate purposes.
Investment Potential
The IPO is appealing due to Ola Electric’s strong market presence, commanding nearly 35% of India’s electric two-wheeler market. The company intends to use the raised capital to boost its manufacturing capabilities and accelerate growth initiatives. Bhavish Aggarwal, CEO of Ola Electric, stressed the company’s commitment to making EVs accessible and highlighted the importance of local production for market penetration into smaller towns and villages.
“We are raising capital for cell manufacturing and research and development,” said Haribhakti Abichandani, Chief Financial Officer of Ola Electric Mobility. “These areas are well-funded from future cash flows, and as we scale, profitability will follow faster.”
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Promoters and Investors
Bhavish Aggarwal and Indus Trust, among the promoters, will sell 37.95 lakh and 1.47 lakh equity shares, respectively. According to the Red Herring Prospectus, Aggarwal currently owns 36,176,825 equity shares, representing 26.24% of the company’s issued, subscribed, and paid-up equity share capital. Post-IPO, his stake will be significantly diluted but will still signify confidence in the company’s growth prospects.
Strategic Investments
The capital raised will support key areas such as expanding cell manufacturing, enhancing R&D capabilities, and repaying existing debt. These investments are expected to drive Ola Electric’s growth, allowing it to capitalize on the rising demand for EVs in India and globally.
On August 13, 2023, Ola Electric announced partnerships with technology firms such as DiscomGrid, Automation, and Richter. This collaboration aims to enhance the company’s R&D efforts and roll out advanced EV technologies. Additionally, Ola Electric plans to invest in a cutting-edge cell production facility in Tamil Nadu, boosting its production capabilities and future growth.
Financial Performance
For the fiscal year 2023-24, Ola Electric reported a revenue of ₹204.8 crore and a loss of ₹50.8 crore. Despite the losses, the company’s strong market position and strategic investments make the IPO an attractive opportunity for investors.
Conclusion
Ola Electric’s IPO marks a significant milestone in its mission to revolutionize the EV market in India. With a focus on enhancing manufacturing capabilities and expanding R&D, the company is well-positioned to lead the transition to sustainable transportation. Investors looking to tap into the growing EV market should consider this IPO a promising opportunity.
The IPO subscription period is from August 2 to August 6, 2024. Promoters Bhavish Aggarwal and Indus Trust, along with other investors, will be offloading shares through the OFS route. This IPO not only marks a pivotal moment for Ola Electric but also signifies a major advancement in India’s EV industry.