Mumbai: Ola Electric will open its public offer for subscription on Friday with a price range of ₹72-76 per share, valuing the company at $4 billion (₹33,522 crore) at the upper end. This is a significant drop from the $5.4 billion valuation it had in its last private funding round in September.
Raising ₹6146 crore
The company, led by Bhavish Aggarwal, aims to raise ₹6,146 crore through this IPO, selling investors on an electric vehicle (EV) growth story with investments in making cells and components. Of this, ₹5,500 crore will come from new equity shares, while about ₹646 crore will come from existing shareholders selling their shares.
Market Leader
Ola Electric is the market leader in the electric two-wheeler segment in India, with a 35% market share in FY24, selling nearly 330,000 units. Its revenues in FY24 grew 90% over the previous year to ₹5,010 crore.
However, the increase in revenue came with a rise in losses, which grew 8% year-on-year to ₹1,584 crore in FY24. Aggarwal believes that increased sales will help the company achieve better efficiencies of scale and reduce losses. The company’s loss margins have already improved from -43% in FY23 to -20% in FY24.
Experts
Experts find Ola Electric’s ₹33,522-crore valuation reasonable, projecting the number of vehicles the company could sell over the next five years and the overall electrification of the automotive market.
“It is fairly priced. But that also means there is not much upside,” said an analyst tracking the automotive industry who declined to be named.
Lower Valuation
When asked about the lower valuation, Aggarwal, the company’s founder and chair, said it was a decision made with investors in mind. “Our philosophy for this company has been very focused on the long term. And that’s why when we decided the price, our whole focus was to make sure we are leaving enough money on the table for investors,” he told Mint on Monday.
In September 2023, Singapore’s Temasek led a $140 million funding round in Ola Electric that valued the company at $5.4 billion.
The lower valuation comes as Aggarwal publicly admitted that the electric car showcased in August 2022 was not part of Ola Electric’s current plans. The company had shown a virtual rendering of an electric car on 15 August 2022 that was “set to arrive in 2024.”
“We’ve never formally communicated any timeline for our car beyond the fact that two years ago we showcased our aspiration product,” Aggarwal said, disputing the timeline mentioned in the video which is still available on Ola Electric’s YouTube channel.
Two-Wheeler Program
The company is focusing on its two-wheeler program and cell manufacturing as the foundation of its EV ecosystem, he said. “That remains our focus. Beyond that, I can’t comment on any products or programs today.”
Similarly, on 15 August 2023, while showcasing prototypes of its motorcycles, the company gave a timeline of “end 2024″ for the products. Aggarwal claimed that the company is adhering to this timeline and hinted that new announcements will be made on 15 August this year, in line with the company’s annual tradition, but did not clarify further.
“On the bike, when we announced last year, we gave a timeline of ‘end of 2024’. In our DRHP also it is ‘end of 2024’ and that is the timeline today also. So again, I can’t be more specific than that. But broadly, we are in that timeline range,” Aggarwal said.
However, in its red herring prospectus, Ola Electric said it will begin deliveries of the motorcycles from the first half of FY26.
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