Ola Electric IPO Sparks Interest: What GMP and Subscription Status Reveal – Should You Invest?

Ola Electric Mobility Limited’s initial public offering (IPO) began on August 2, 2024, and will be open for investors until August 6, 2024. The IPO has already attracted significant interest from retail investors, indicating a strong response. The price range for Ola Electric shares is set between ₹72 and ₹76 per share.

The company is aiming to raise ₹6,145.56 crore through this IPO. Out of this, ₹5,500 crore will come from issuing new shares, while ₹645.56 crore is allocated for the Offer for Sale (OFS) route. However, the premium for Ola Electric shares in the grey market has decreased since the first day of bidding.

Grey Market Premium (GMP)

Currently, the grey market premium (GMP) stands at ₹9, which is ₹7 lower than Friday’s GMP of ₹16. This drop is attributed to the recent stock market crash, which was influenced by weak global market signals leading to heavy selling in Asian, European, and US stock markets.

Despite the decrease in GMP, the IPO has been fully subscribed by retail investors. There are still two days left for bidding, and the subscription levels may improve as the final deadline approaches on Monday.

IPO Subscription

As of the end of the first day, the IPO was subscribed 0.35 times overall. Specifically, the retail portion was subscribed 1.57 times, while the non-institutional investor (NII) portion was filled 0.20 times.

Recommendations

In terms of expert recommendations, BP Equities has given the IPO a ‘subscribe’ rating. They highlight the positive outlook for the electric vehicle (EV) market, favorable regulatory environment, and the company’s plans for new models and a cell manufacturing unit (Gigafactory) as strong points. They believe these factors justify a medium to long-term positive view on the IPO. Anand Rathi has also recommended subscribing to the IPO. They note that, at the upper end of the price band, the company is valued at a Marketcap/Sales ratio of 6.6x, with a market cap of ₹335,220 million after issuing new shares. Although this is considered high compared to other global automobile companies, they still suggest subscribing to the IPO, but with a higher risk appetite.

In summary, despite some market volatility and a decrease in GMP, the general consensus among analysts is to consider applying for the IPO with a long-term investment approach.