OLAELEC

Reallocates IPO Funds to Debt

is under pressure as slumping sales and stalled fundraising efforts force it to divert IPO proceeds originally earmarked for innovation into debt repayment. The Bengaluru-based EV maker has now reallocated ₹575 crore from its R&D budget to pay off debt and support growth, highlighting mounting financial stress. While regulatory allowances permit such changes, repeated reallocations raise investor concerns about sustainability. Fund Utilization & Reallocation - IPO raised ₹5,275 crore in Aug 2024 for R&D, gigafactory expansion, and debt repayment. - So far, ₹3,982 crore utilized across corporate purposes, growth, R&D, and debt repayment. - Latest board decision: - ₹475 crore for debt obligations. - ₹100 crore for growth activities. - Original R&D allocation: ₹1,600 crore → now ₹930 crore, of which ₹810 crore already spent. - Total debt obligations: ₹526 crore (FY26), ₹610 crore (FY27), excluding short-term debt. - Cumulative debt repayment allocation across subsidiaries: ₹1,670 crore, with ₹1,102 crore used. Financial Performance - Q3FY26 losses narrowed to ₹487 crore (vs. ₹564 crore YoY). - Revenue fell 57% to ₹504 crore. - Sales dropped 61% to 32,680 units, lowest quarterly sales since IPO. - Declining sales have forced reliance on IPO funds to bolster balance sheet. Fundraising Stress - Announced fundraises remain incomplete: - ₹1,500 crore equity issue (Oct 2025). - ₹1,700 crore NCD issue (May 2025). - Share price has halved over the past year, reflecting investor caution amid rising competition from Ather Energy, Bajaj Auto, and TVS Motor. Outlook While reallocations have stabilized Ola’s debt position, they underscore weak cash generation and declining sales momentum. The company’s ability to sustain innovation, scale its gigafactory, and compete in India’s crowded EV market will depend on successful fundraising and a turnaround in demand.