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Here’s everything you need to know about Ola Electric’s upcoming IPO
Do you want to contribute to a greener India? If yes, Ola Electric's IPO coming up in 2024 might interest you.

ola ipo

It is just about time for the new year. Be ready to open your doors because the new year is coming with new opportunities for stock market investors.

Sometimes, the news of IPOs comes to us so late that most lose out on the opportunity. But, this time, it is different. Ola’s pre-IPO news has been making noise for a while now, and here’s a chance for you to learn everything about it well in advance.

Who is Ola Electric?

Ola Electric is a popular brand manufacturing and selling electric two-wheelers in India. Founded by Bhavish Aggarwal, Ola is headquartered in Bengaluru, India and is the country’s largest manufacturer of electric two-wheelers.

History

It was in 2017 when the founder of Ola Cabs, Bhavish Aggarwal, noticed increased emissions and dependency on fuel for cabs. To reduce dependency, Ola Electric was established under ANI Technologies (Ola Cab’s parent company).

You may also like: What does the EV boom mean for auto stocks?

After a successful pilot program, Ola Electric was all set to go live in the market in 2021. The company set up the largest two-wheeler factory in Tamil Nadu and was ready to take orders in 2021. In the first month, Ola received 5,00,000 bookings.

Objective and vision

The company’s objective is to create a revolution in the electric vehicle industry and bring more sustainability to transportation. 

Ola’s vision is to unite young, brilliant minds and shape the global electric vehicles’ future.

Ola today

Today, Ola Electric is famous and spotted quite frequently on the road. As of 2023, it has three two-wheeler variants, ranging from an approximate cost of ₹90,000 to ₹1,50,000.

Ola’s scooters have travelled 268 crore kilometres and saved ₹629 crores of fuel cost. Ola’s electric scooters have been instrumental in reducing emissions of 7.8 crore kgs.

The company has a robust research and development team with 702 employees and 232 patents in India. Ola Electric was valued at $5.4 billion in September 2023.

Ola Electric’s financials

ParticularsFY 2023 (₹ million)FY 2022 (₹ million)FY 2021 (₹ million)
Revenue from operations26,309.273,734.238.64
Expenses38,833.7511,738.122,849.03
Loss for the year(14,720.79)(7,841.50)(1,992.32)
EPS – Basic (₹)(3.91)(2.23)(0.59)
Return on Networth (%)(62.47)(21.42)(10.11)
Net Asset Value per share (₹)6.2610.435.83
EBITDA(11,970.98)(7,175.52)(1,788.22)

Ola Electric’s IPO details

Ola’s IPO news is making noise for a while now. However, the company is yet to announce the IPO dates. Ola’s IPO dates are expected to be in early 2024. The company has not disclosed the price bands either. Currently, the prospectus filed with SEBI shows the following details:

Issue typeFresh issue and Offer for sale
Issue sizeFresh issue of ₹5,500 crores Offer for sale – 95,191,195 equity shares
Minimum bid Yet to be announced

IPO reservations
75% – Qualified Institutional Buyers (QIB)
15% – Non-Institutional Buyers (NIB)
10% – Retail investors

Also read: Financing your next car purchase? India’s auto finance sector and lenders

Shareholding pattern

Name of the shareholderShareholding percentage
Bhavish Aggarwal36.94%
SVF II Ostrich (DE) LLC21.98%
OEM Employees Welfare Trust7.67%
Internet Fund III Pte Ltd6.03%
ANI Technologies Private Limited4.35%
Indus Trust3.85%
Alpha Wave Ventures II, LP3.49%
Matrix Partners India Investments III, LLC3.43%
Hyundai Motor Company2.95%
V-Sciences Investments Pte Ltd1.78%
MacRitchie Investments Pte Ltd1.25%

Fund utilisation plan

The entire proceeds received from the offer for sale will be used to pay the selling shareholders after deducting expenses related to the public offer.

Following are the estimates proposed to use funds received through the fresh issue:

  • ₹12,264.27 million will be invested in capital expenses for Ola’s subsidiary, Ola Cell Technologies Private Limited.
  • ₹8,000 million will be used to repay the debts of another subsidiary, Ola Electric Technologies Private Limited, either partially or fully.
  • ₹16,000 million will be directed towards research and development of products.
  • ₹3,500 million will be used for various initiatives towards Ola Electric’s organic growth.
  • The remaining funds based on the subscription will be used for other general corporate purposes.

Is Ola’s IPO for you?

The electric vehicle segment in India is booming. More and more riders are turning towards these vehicles to contribute to a healthier environment. Given the growth prospects and rising demand, owning stocks in the electric vehicle sector might be a wise addition to one’s portfolio today. However, let’s deep dive into Ola’s strengths and risks to know if Ola’s stocks fit your portfolio.

Peer review

Company
Revenue from operations for FY 2023 (₹ million)EPS – Basic (₹)Return on Net Worth %NAV per share (₹)
P/E ratio
Ola Electric26,309.27(3.91)62.47%6.26NA
TVS Motors319,739.9027.9722%124.4069.69
Eicher Motors144,421.80106.5619%547.2636.78
Bajaj Auto364,553.80212.5021%1,029.4829.95
Hero MotoCorp341,583.80140.4917%838.9727.16

Take a chance, because:

  • The electric two-wheeler market in India is currently growing. According to a report by Redseer, 4.5% of the registered two-wheelers on the VAHAN portal were electric in 2023. The percentage is expected to reach 41-56% by 2028. Ola Electric is a company purely focusing on manufacturing electric vehicles and is presently a market leader in that category. 31% of the electric two-wheelers sold in India from April to September 2023 belonged to Ola Electric, making it the largest EV seller in the country.
  • Besides a highly skilled management team, Ola has a potent research and development team, with over 900 employees, some of whom are PhD holders. The company prioritises research and development to improve the quality of vehicles and update them with the latest technologies. The company’s increasing trend towards R&D expenditure proves their effort in this direction.
Year R&D expenses
2021₹436.06 million
2022₹1,758.40 million
2023₹5,077.11 million
  • Ola’s manufacturing facility in Tamil Nadu, called Ola Futurefactory, is the largest electric two-wheeler manufacturing facility in India. With in-house designs and technologies for manufacturing EV components, Ola can achieve economies of scale and optimise the performance of vehicles.
  • The company follows a direct-to-customer sales model, helping Ola establish direct contact with customers. This increases the customer’s experience and helps the company manage client feedback effectively. Ola has over 900 experience centres nationwide, showcasing the company’s customer-centric approach.
  • Ola is eligible for various government incentive schemes. The company and its customers are qualified for subsidised rates under these schemes, giving a cost advantage to both parties.

Also read: The role of the energy sector in powering India’s growth.

Watch out for:

The increasing demand for electric vehicles has led to a rise in the number of companies entering the field. Given the high competition rate, it may be difficult for one brand to continue standing at the top of the chart for a long time. 

  • Despite Ola Electric’s increasing revenue, the company is burning cash. Ola expects to incur losses for the next few years as most of the revenue is spent on the company’s expansion.
  • Electric vehicles are technical machines which can break down due to manufacturing defects. These vehicles use lithium-ion cells, which can catch fire. There was an incident in Pune where an Ola two-wheeler caught fire. Such incidents can impact the company’s brand image adversely.
  • Any reduction in government subsidies for Ola’s vehicles increases the vehicle’s cost, affecting the demand for Ola’s two-wheelers.
  • Ola Electric focuses on making electric two-wheelers alone, restricting its product portfolio. Due to the lack of diversity, the company’s operations may suffer if consumer preferences change.
  • The company needs to be on its toes to assess the changing preferences of consumers every day and update its products accordingly. Failure to do so will put the brand behind in the race.

Bottomline

Every industry in the country is currently turning towards sustainability. The growth of electric vehicles is an effort towards that. While it seems like the right time to invest in the stocks of an electric vehicle brand, it is essential to consider the risks involved, too. 

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StockGro Team

StockGro is India’s first and largest ‘Social Investment’ platform aimed at helping you master the art of “Trading & Investment”. Trade, Invest and get rewarded to Learn everything about ‘Investments’ the fun-filled way.

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