Ola Electric IPO: Ola Electric, a popular electric vehicle company, made history in the Indian financial market by becoming the first electric vehicle company to submit draft papers for IPO on 22nd December 2023. This move comes as the electric vehicle industry gains momentum globally and establishes itself as a prominent player in India’s sustainable mobility sector.
With an estimated value of $5.4 billion in 2023 and notable investors, Ola’s electric IPO garnered significant interest among industry observers and investors alike. This development is indicative of the growing interest in sustainable mobility solutions and highlights the potential for growth in the EV market in India.
Ola Electric IPO 2024
The draft red herring prospectus (DRHP) submitted to the Securities and Exchange Board of India (SEBI) provides an overview of an Initial Public Offering (IPO), but it does not disclose specific information about the price band and timing. However, it contains essential details such as issue objectives, risk factors, and other crucial information that potential investors should review carefully.
Understanding the DRHP is crucial for making informed investment decisions in the stock market. Therefore, thoroughly reading this document can provide valuable insights into the company’s financial health and future prospects.
Ola Electric IPO Details
| Scheme name | Holidays Announced |
| Category | Finance |
| Official Website | Click Here |
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Overview of Ola Electric Business
The business model of Ola’s company rests on three main pillars: adaptable manufacturing, research and development, technological innovation, supply chain, and a direct-to-consumer omnichannel distribution network. This network encompasses 935 professional centers in India, with 414 dedicated to servicing. According to analysis, Ola electric company currently offers five scooter models and holds a 31% market share in the E2W segment.
The high recognition and popularity of Ola electric vehicle company in the market are evident, and the company also exports electric vehicles internationally. Despite being a popular electric vehicle company, Ola has a history of negative cash flow and losses, so investors should be mindful of associated risk factors, issue details, objectives, price bands, and more. In 2023, the Ola Electric Company dominated the revenue generation in the Indian electric 2-wheeler market.
Founder of Ola electric vehicle company
Bhavish Aggarwal, the founder of Ola electric vehicle company, has announced his plan to sell 47.4 million shares in SoftBank group-backed electric scooter maker. Ola aims to achieve a valuation of $7-$8 billion by early 2024 and is planning to transform into a public company with many expansions and innovations. To accomplish this, the company has submitted draft papers for IPO and will undergo restructuring, including changing its name from Ola Electric Mobility Pvt Ltd to Ola Electric Mobility Limited. While the IPO subscription dates and price band details are yet to be announced, transforming from a private to public company is a significant step for companies seeking to list themselves on the stock exchange. This move could allow Ola to expand its market share and secure funds for future growth opportunities.
Fundraising aim and dual issue structure
Ola, the electric vehicle company, has set a goal of raising Rs 7,250 crore through an IPO. The aim of this move is to promote growth and boost confidence in the electric vehicle market. The dual issue structure of the IPO includes an offer for sale and new shares issuance. The new shares will raise Rs 5,500 crore, while the offer for sale will involve the sale of shares worth Rs 1,750 crores. This funding will allow Ola to expand its operations and increase its market share in the growing electric vehicle industry. The move towards sustainable transportation solutions is essential for combating climate change and reducing carbon emissions.
Ola electric IPO- 10 key things to must know from DRHP
Here are the 10 essential details from the OPA electric IPO’s DRHP, covering aspects such as risk, price band, objectives, and more, that you should be aware of.
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IPO Details
Ola Electric is planning to raise funds through equity shares worth Rs 5,500 crore and an offer for sale of 95,191,195 equity shares at a face value of Rs 10. As per the draft papers submitted on December 22, 2023, the founder of Ola EV company, Bhavish Aggarwal will sell 47.4 million shares as part of the offer for sale. In addition to this, Ola Electric has also invested Rs 45 lakh in Pune-based electric vehicle startup Tork Motorcycles. This move highlights Ola Electric’s commitment towards promoting sustainable mobility solutions in India and supporting innovative startups in the EV space.
IPO Objectives
The Draft Red Herring Prospectus (DRHP) indicates that the net proceeds of up to ₹1226.4 crore from the clear issue might be utilized for capital expenditure incurred through the subsidiary. Additionally, ₹1,60 crore could be allocated towards investment in research and development, while ₹350 crore could be used to fund growth initiatives and overall company functions. Another significant portion of the net proceeds, ₹800 crores, is intended to pre-pay or pay off the indebtedness incurred by Ola Electric Technologies (OET), which is a subsidiary. These investments and expenditures demonstrate Ola’s commitment to expanding its business operations and investing in innovative technology solutions.
Business Model
The Ola Electric IPO business model is based on three key structures. Firstly, the company emphasizes research and development as well as technical platform with in-house design and development throughout EV technologies and components. Secondly, it has an adaptable production and supply chain platform that can efficiently meet the demands of its customers. Lastly, Ola Electric has a direct-to-consumer omnichannel distribution platform comprising 935 experience centers spread across India, including 414 service centers. These experience centers allow customers to have a more personalized experience while also making it easier for them to get their vehicles serviced. By focusing on these three structures, Ola Electric is positioning itself as a leader in the electric vehicle market in India.
Company Financial
In the fiscal year 2023, the company’s sales from operations increased by over seven times to reach ₹2,630.93 crore as compare to ₹373.42 crore in the previous year. Sales from operations for the three months ending 30 June 2023 were record at ₹1,242.75 crore. The company emerged as a leader among Indian integrated electric two-wheeler (E2W) and original equipment manufacturers (OEMs) in terms of revenue generated from E2W sales in FY23. This remarkable growth can be attributed to the increasing demand for electric vehicles and the company’s focus on producing high-quality and innovative products that cater to consumer needs.
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IPO Dates
Although Ola Electric Company has not made any official announcement regarding the opening and closing dates of its IPO subscription, several media reports have suggested that the public issue might take place in early 2024. The company has been making waves in the Indian EV market with its innovative products and services, and an IPO could help it raise significant funds to fuel further growth. However, investors should keep an eye on any updates from the company to stay informed about the exact timeline for the IPO.
IPO Reservation
The book-building process is causing an issue where only 75% of the problem will be available for allocation to qualified institutional customers (QIBs) on a proportionate basis. Non-institutional traders (NIIs) are limited to no more than 15% of the issue, and retail individual bidders have access to no more than 10%. This method ensures that QIBs receive the largest allocation as they are consider to be knowledgeable investors capable of making inform decisions. However, it limits the availability of shares for non-institutional and retail investors, who may not have access to the same level of expertise or resources.
IPO book lead managers
Citigroup Global Markets India Private Limited, Kotak Mahindra Capital Company Limited, BofA Securities India Limited, Goldman Sachs (India) Securities Private Limited, Axis Capital Limited, ICICI Securities Limited, SBI Capital Markets, and others serve as the lead managers for the book. Link Intime India Private Limited acts as the registrar for the company’s sales offer.
Product Portfolio
Ola Electric introduced its first EV model, the S1 Pro, in August 2021, and currently offers a range of five scooter models. Within just nine months of the launch of its first EV scooter, Ola Electric has become the largest selling E2W (Electric Two Wheeler) manufacturer in India based on registrations recorded on the VAHAN portal of the Ministry of Road and Highways. With a 31% E2W market share as per the 2023 analysis, Ola Electric is looking to expand its reach by exporting EVs to specific international markets, according to DRHP (Draft Red Herring Prospectus). As part of its expansion plans, the company aims to set up an extensive charging network across India and collaborate with state governments for infrastructure development.
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Losses Registered in FY23
Ola Electric, an electric vehicle company that is set to go public, report a significant increase in its total loss for the financial year 2022-2023. The company’s overall expenses skyrocketed, resulting in a loss of ₹1,472 crore, almost double the previous year’s figure of ₹784.1 crore. Ola Electric’s EBITDA (earnings before interest, taxes, depreciation, and amortization) loss stood at ₹1,318 crore due to a significant rise in overall costs to ₹3,383 crore. In the previous financial year FY22), the company experienced an increase of nearly 293% in losses to ₹784 crore. While these numbers may seem daunting, it is important to note that many companies experience increased losses during their early stages as they invest heavily in research and development and expansion efforts.
Key risk factors to the IPO
Ola Electric stated in its DRHP that it faces several key risk factors for the IPO, including a limited operating history, financial losses, and negative cash flows. The company also anticipates the possibility of continued losses in the near future. Additionally, manufacturing timelines are affected by quality issues and defects, and the organization is exposed to risks that could impact its in-house cell manufacturing capabilities at the Ola Gigafactory.
According to the preliminary documents filed by Ola electric vehicle company for its IPO, the proceeds raise from the offering will be assign to the Ola giga factory project’s capital expenditure, OCT subsidiary, OET subsidiary debt repayment, product development and research investment, expenses related to organic growth initiatives, and general corporate purposes.
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Major Risk Factors
When investing in a company or asset, it is important to consider risk factors. Ola Electric, an EV company, recently submitted draft papers for IPO and outlined various risk factors in the DRHP draft red herring prospectus. One major risk factor is that the company has not been operating for a long time and has experienced negative cash flow and losses. Another risk factor is the quality issues and manufacturing defects that can impact the manufacturing timeline and pose challenges for the company.
It is essential for investors to carefully evaluate these risks before making any investment decisions. Additionally, it is crucial to monitor ongoing developments with the company to ensure that any changes in risk factors are taken into consideration.
The draft paper highlights the risks faced by Ola Electric’s in-house cell manufacturing team and emphasizes the need for the company to adopt a comprehensive risk management approach to address these risks.
Conclusion
The Ola Electric IPO offers an investment opportunity in India’s developing EV market, providing investors with a comprehensive understanding of the company’s operations and finances through transparent disclosure in the DRHP. This facilitates informed decision-making regarding current and future prospects of Ola Electric.
Ola’s strategic IPO allocation focuses on key areas such as debt repayment, R&D, and development, reflecting its commitment to sustainable business practices. As the electric vehicle company gains prominence in the EV market, it represents a significant milestone for India and contributes to a cleaner and more sustainable transport ecosystem. Enthusiasts, industry analysts, and investors are encourage to closely examine the Ola electric IPO public offering, including issue details, price band, objectives, and the mention risk factors before making an investment decision.
Ola Electric IPO FAQ’S
What are the objectives of Ola Electric?
Ola's electric vehicle company aims to raise Rs 7,250 crore through its IPO to foster further growth and confidence in the EV market.
What is the public issue of Ola Electric?
The issue size of the Ola Electric IPO is Rs 5,500 crore fresh issue + offer for sale of 9.52 crore shares.
What are the objectives of electric vehicles in India?
Reduce Air Pollution and health issues caused by it.
Is Ola an IPO?
Ola Electric, the electric vehicle subsidiary of Ola, is poised to become one of the highly awaited initial public offerings (IPOs) in 2024.
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