Electric 2W Player Ola Electric Sets IPO Price Band at Rs 72-76 Per Share.

     Bhavish Aggarwal, CMD, Ola Electric Mobility Limited At The IPO Press Conference In Mumbai On Monday, 29th July 2024

Electric 2W Player Ola Electric Sets IPO Price Band at Rs 72-76 Per Share.

                    Electric 2W player Ola Electric sets IPO price band at Rs 72-76 per share, marking the biggest initial public offering (IPO) of the year so far. The country's largest electric two-wheeler (e2W) manufacturer aims to raise Rs 6,146 crore ($734 million). With approximately 150 companies having already gone public this year, raising a total of $5 billion—double the amount raised during the same period last year—Ola Electric's IPO is a significant event in the Indian market.

The Softbank-backed company has set a price band of Rs 72-76 per share for its maiden share sale, which will test the market's appetite for new-age loss-making companies. At the top end of the price band, Ola Electric will be valued at Rs 33,522 crore ($4 billion) on a post-diluted basis. The IPO will open on August 2.

Founder and CEO Bhavish Aggarwal, who is charting a path to profitability for Ola Electric, told reporters at the IPO press conference in Mumbai that volume growth and vertical integration would be the main pillars for improving the company’s margins. Through the IPO, the Bengaluru-based firm is looking to issue fresh shares worth Rs 5,500 crore, which will be utilised to repay debt, expand its gigafactory, and fund research and development.

The Offer for Sale (OFS) portion of the issue is only Rs 646 crore, of which Aggarwal’s share is Rs 288 crore. About nine other investors are selling stakes, including Tiger Global (Rs 48 crore) and Softbank (Rs 181 crore). Alpine Opportunity and Tekne Private are offloading small quantities at a loss, as their acquisition cost is over Rs 111 per share.

Following the IPO, the promoter shareholding in the company will decline from nearly 45 per cent to 36.78 per cent. Investment bankers said the pricing of the IPO is based on investor feedback, and they expect strong responses from both domestic and foreign mutual funds. According to a Reuters report citing sources, the IPO is set to draw bids from Fidelity, Nomura, and Norges Bank, as well as several Indian mutual funds.

Aggarwal commented on the burgeoning EV market, saying, “The India EV story is still in early days. Three years ago, when we launched our products, that is when I believe the EV story began. We see the EV market only expanding. You also see the incumbents, who three years back said there is no EV story, are also joining the segment.”

When asked about the drop in sales and the global EV segment experiencing a slowdown, Aggarwal stated that like other industries, this would go through cycles. “There will be cyclical ups and downs, either subsidy changes or some cyclical seasonal stuff,” he said.

Ola Electric’s gross margins have improved from 5.4 per cent in FY22 to 7.63 per cent in FY23 and 16.47 per cent in FY24. Its volumes have grown from 156,000 units in FY23 to 330,000 units in FY24. Ola Electric currently sources cells from third-party suppliers. It has started trial runs at the gigafactory in Tamil Nadu where phase 1 of the project was completed in May (1.4 GwH capacity).

The company has developed a cell technology around the 4680 form factor for which it received BIS certification in May, which will be used in existing and future products. The gigafactory will have a capacity of 20 GwH (in four phases). Ola Electric is also in line for the Cell PLI (production-linked incentive) scheme. It has already received certification for the S1 Pro product under the PLI scheme and is currently filing for the first claims to the Centre.

Ola Electric’s 2000-acre EV hub in Krishnagiri and Dharmapuri districts of Tamil Nadu, which houses the ‘futurefactory’ and the gigafactory, along with co-located suppliers, will help achieve greater efficiency. Aggarwal said the company would start delivering motorcycles by early next year. It had showcased four motorcycle models – Adventure, Cruiser, Roadster, and Diamondhead – last August. Meanwhile, on August 15, the company plans to unveil more two-wheeler models.

As India expects to grab a larger share of two-wheeler exports, Aggarwal is betting big on Ola Electric for a smooth drive. The electric 2W player Ola Electric sets IPO price band at Rs 72-76 per share, marking a pivotal moment in the Indian electric vehicle market.

Electric 2W player Ola Electric sets IPO price band at Rs 72-76 per share, reflecting its strategic move to capitalise on the growing demand for electric vehicles. With the funds raised, Ola Electric aims to expand its operations, enhance its technological capabilities, and solidify its position as a leader in the electric vehicle sector. The company's vision and strategic initiatives are set to pave the way for a more sustainable and innovative future in the electric mobility space.