Ola IPO could value the EV firm between $4.2b and $4.4b

• Founder Bhavish Aggarwal will be offloading approximately 20% lesser shares compared to initial expectations.
• Ola Electric founder Aggarwal now plans to sell around 37.91m shares instead of the previously indicated 47.39m.
• IPO will raise about Rs5,500 crore as capital.

Ola Electric has announced the forthcoming launch of its Initial Public Offering (IPO), marking a pivotal moment in the corporate journey of the beloved two-wheeler electric vehicle (EV) manufacturer.

Scheduled to unveil its anchor book for the IPO on August 1 and opening the offering to the public from August 2 until August 6, Ola Electric’s entry into the stock market is eagerly anticipated.

The company’s IPO could value Ola Electric between $4.2 billion and $4.4billion, an intriguing prospect given the rapid evolution of the EV market and its influence on both domestic and global stages.

In the IPO process, Ola Electric’s founder, Bhavish Aggarwal, will be offloading approximately 20 per cent lesser shares compared to initial expectations, now planning to sell around 37.91 million shares instead of the previously indicated 47.39 million.

Create opportunities for early investors

The adjustment highlights both the dynamism within the market and potential investor sentiments. According to the Red Herring Prospectus filed on July 27, stakeholders can expect that this IPO will raise a substantial amount of capital, particularly Rs5,500 crore, which will not only facilitate Ola Electric’s growth initiatives but will also create opportunities for early investors to realise returns.

The strategic decision by DIG Investment to divest its equity stake, amounting to around 839,941 shares, further emphasises the complex dynamics at play within the firm’s shareholding structure. DIG Investment’s previous stake of about 0.95 per cent allows it to partake in the overall liquidity and distribution of shares in the market, creating room for new stakeholders to enter.

The expected valuation represents a notable decline when compared to its most recent funding round in September, where the company’s worth was estimated at $5.4 billion, reflecting a shift of about 18.5 per cent to 22 per cent downward.

The adjustment in valuation, undoubtedly linked to a myriad of factors, including macroeconomic conditions, consumer behaviour, and industry competition, raises questions and discussions among analysts and investors regarding the true valuation of emerging EV companies.

Ola the leader in EV

The competitive landscape for electric two-wheelers in India is corroborated by Ola Electric’s leading position, with a commanding market share of 44 per cent as of June, entrusting the firm with significant potential in an expanding market.

Despite the promising growth trajectory, Ola Electric has not been immune to financial challenges. For the fiscal year that concluded in March 2024, the firm’s revenue from operations reached Rs5,009.8 crore, albeit with a net loss of Rs1,584.4 crore.

This is an increase from the previous fiscal year, wherein revenue stood at Rs2,631 crore with associated losses of Rs1,472 crore. Such financial metrics underscore the complexities involved in scaling operations within a capital-intensive industry characterized by rapid technological advancements and fierce competition.

Ola Electric’s IPO is particularly significant as it opens the door for the first Indian electric two-wheeler company to list on Dalal Street.

The milestone not only signifies Ola’s aspirations for broader horizons but also reflects a maturing market that is increasingly attracting investor interest. The success of Ola Electric may likely set a precedent for other EV companies in India, thereby accelerating the overall progress and acceptance of electric mobility.

Additionally, the implications of investor sentiment surrounding Ola Electric’s public offering cannot be overstated. With a multitude of SoftBank-funded companies, such as Paytm, Delhivery, and others, having recently gone public in India, the performance of Ola Electric may either catalyse or temper future IPO prospects in the electric mobility domain.