The Securities and Exchange Board of India, SEBI, has approved Ola Electric’s initial public offering (IPO), as per a report by Moneycontrol. The company plans to raise Rs 7,250 crore through this IPO.
2024 will see lots of prominent IPOs in the Indian market: Swiggy, Oyo, PharmEasy, Bansal Wire Industries, One MobiKwik Systems, and CJ Darcl Logistics. Approximately 18 firms have received approval from the Securities and Exchange Board of India (Sebi) to initiate initial public offerings (IPOs), aiming to raise a combined amount exceeding ₹20,000 crore, according to data from the Prime Data base.
Additionally, 37 companies have submitted draft red herring prospectuses (DRHPs) to Sebi, seeking to raise over ₹50,000 crore, pending approval.
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Ola Electric: The first two-wheeler manufacturer IPO
This is the first time that a two-wheeler EV manufacturer is going for an IPO. Further, this will be the first time Ola is trying to go public. Ride-hailing platform Ola Cabs also intends to raise $500 million through an IPO at a valuation of approximately $5 billion. As the ride-hailing app plans for an IPO in April, ANI Technology, the parent company of Ola Cabs, had preliminary discussions with investment banks, as per a report by Moneycontrol.
Additionally, the fact that it is the first electric vehicle IPO in India comes as a major push for the electric vehicle sector in India. Ola Electric is already a dominant player in the EV segment, with approximately 52% of the market share. It is followed by TVS Motor, Baja Auto, and Ather Energy.
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A successful IPO by Ola Electric is expected to spark a wave of IPOs from other major electric vehicle manufacturers. This includes its Bengaluru-based competitor, Ather Energy, which is already hiring merchant bankers in preparation.
There has been a push towards electric vehicles in India. With the aim of promoting India as a manufacturing destination for e-vehicles, the government approved the e-vehicle policy. Under the new policy, the government will be giving duty concessions to companies that will set up manufacturing units in the country. Similarly, Union Minister Nitin Gadkari said in April 2024 that the country would get rid of petrol and diesel vehicles. A report by McKinsey & Company adds that electric two-wheelers might account for 60 to 70 percent of new sales in India by 2030.
A sneak peek into the IPO
Ola Electric's IPO includes a fresh issue of ₹5,500 crore and an offer for sale (OFS) worth ₹1,750 crore, totaling ₹7,250 crore. According to the company's DRHP, existing shareholders will sell 95.19 million shares through the OFS.
Founder Bhavish Aggarwal will sell 47.3 million shares. While initial investors like AlphaWave, Alpine, DIG Investment, Matrix, and others will sell a combined 47.89 million shares via the OFS, Meanwhile, ahead of the IPO, Ola Electric has also raised Rs 100 crore from Alteria Capital, as per a report by Entrackr.
According to regulatory records obtained from the Registrar of Companies (RoC), Ola Electric's board has approved a special resolution to issue 10,000 non-convertible bonds at an issue price of Rs 1,00,00 each in order to generate Rs 100 crore.
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A look at the company’s financials
In the financial year ending March 2023 (FY 23), Ola Electric reported consolidated revenue of Rs 2,782 crore, up by 510 percent from Rs 456 crore in FY22. However, the company’s loss doubled to Rs 1,472 crore in FY23 from Rs 784.1 crore in the previous financial year.
The company recorded an EBITDA loss of ₹1,318 crore in FY23. In a note to investors, the company stated that it aims to achieve an EBITDA profitability of ₹803 crore in FY25.
Ola Electric has been preparing for an IPO for a while. Recently, the Economic Times reported that the company plans to lay off around 400–500 employees with the aim of reducing operational costs. It was reportedly said that the impacted employees would be replaced by new firings that would be done at a relatively lower cost. With Ola Electric all set for the IPO, it remains to be seen how the IPO will perform in the Indian market and what its impact will be.
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