Ola Electric IPO: Ola Electric Mobility Limited’s initial public offering (IPO) went live on the Indian primary market on August 2, 2024, and will be ready for bids until August 6, 2024. The Ola Electric IPO subscription status indicates that retail investors responded positively to the year’s most major public offering. Ola Electric’s IPO price ranges from ₹72 to ₹76 per equity share.
The business seeks to collect ₹6,145.56 crore through its initial offer, with ₹5,500 crore allocated to new share issuance. The Offer for Sale (OFS) route has a reserved amount of ₹645.56 crore. However, the premium for Ola Electric Mobility shares has fallen following the first day of bidding. Ola Electric’s share price is currently trading at a premium of ₹10 in the gray market, according to stock market observers.
Ola Electric’s IPO GMP today
Today’s Ola Electric IPO grey market premium (GMP) is ₹10, a decrease of ₹6 from Friday’s GMP of ₹16. According to market analysts, Ola Electric’s IPO GMP fell because of significant selling in the Indian stock market during the last two sessions. They observed that weak global market cues resulted in strong selling in the Asian, European, and US stock markets during the prior week’s final session. However, the largest IPO of the year in the retail sector was fully subscribed.
Subscription status for the Ola Electric IPO
By 10:21 a.m. on day two of bidding, the public issue had been booked 0.51 times, the retail portion of the book build issue had been subscribed 2.01 times, and the NII portion had been filled 0.47%.
Review of the Ola Electric Initial Public Offering
The BP Equities report, which gives the public issue subscribe tag, says, “On account of the positive EV market outlook, favorable regulatory environment, a large quantum of the fresh issue in the IPO, announcement of new models, and the upcoming cell manufacturing unit (Gigafactory), we have a positive view for the company from a medium to long term perspective. As a result, we propose a SUBSCRIBE rating for the issue.
Anand Rathi has assigned a ‘subscribe’ rating to the public offering, stating, “At the upper price band, the company’s valuation stands at a Marketcap/Sales ratio of 6.6x, with a market capitalization of ₹335,220 million post equity share issuance.” They noted that top global automakers typically trade at a Marketcap/Sales ratio of 1-8x. Consequently, they consider the company’s valuation to be high. Therefore, they recommend a “Subscribe – long term” rating for the IPO for those with a higher risk appetite.
Analyst Recommendations for Ola Electric’s Initial Public Offering
Most brokerages rate the IPO’subscribe with caution. They suggest investors read the company’s prospectus, financial statements, and risk factors before making any investment decisions.
In its IPO note, brokerage firm Swastika rated the Ola Electric IPO ‘Neutral’. According to the statement, Ola Electric Mobility Ltd (OEML), a leading player in the Indian EV sector, is building vertically integrated manufacturing and technology capabilities for EVs and their parts, such as cells. The company’s business plan is to capitalize on India’s transportation electrification potential and to seek future opportunities to sell its EVs to specific global markets.
“In terms of financial performance, the corporation has posted losses in each of the last three fiscal years. The company’s significant investment in R&D may not yield results in the short future. Due to increased competition, it may experience downward pricing pressure, especially if the company’s personnel attrition rate is high. The company plans to penetrate the E-2W bike, three-wheeler, automotive, and, most crucially, the 4680 Li-ion battery markets, where it hopes to establish itself as a global center for EV batteries. Although its topline (revenue) has increased year after year, its bottom line (profit) has risen as a result of lower losses. “Undoubtedly, more time will be required to turn the corner and eliminate the losses,” the brokerage business added.
“We have a neutral position on this IPO in light of these reasons,” Swastika stated in its note.
Anand Rathi Research has given the IPO a “subscribe with caution” rating. They noted, “Even though the company is currently loss-making, it has grown its market share to 34.8% in the E2W segment. The company is valued at 6.6 times market cap/sales, with a market capitalization of Rs 33,522 crore post equity share issuance. We believe the company is overpriced.”
Ola Electric’s IPO: More Details
The company’s IPO consists of a fresh issue of equity shares up to Rs 5,500 crore and an offer for sale (OFS) of 8.49 lakh equity shares valued at Rs 645.56 crore by promoters and investors at the upper end of the price range. This brings the total issue size to Rs 6,145.56 crores.
Ola Electric Mobility raised Rs 2,763 crore from anchor investors on Thursday, one day before its first public offering.
Bhavish Aggarwal-owned company’s public offering is highly anticipated by investors, and its market debut next month will be one of India’s largest IPOs this year. It will also be India’s first electric two-wheeler to be listed on the stock exchange.
Investors must apply for at least 195 equity shares, and in multiples thereof. Thus, retail investors’ minimum investment would be Rs 14,820 [195 (lot size) x Rs 76 (highest price band)].
Under the OFS, Ola Electric founder Bhavish Aggarwal will sell around 3.8 crore shares.
The IPO will give Ola Electric the much-needed incentive to invest in expanding cell manufacturing capacity as well as research and development of future technologies and products.
According to its prospectus, Ola Electric Mobility Ltd (OEML) intends to use Rs 1,227.6 crore of the proceeds of its Rs 5,500-crore public offering to increase the capacity of its cell production factory to 6.4 GWh from 5 GWh.
The company intends to utilize Rs 1,600 crore of the new cash for research and product development, another Rs 800 crore for debt repayment, and Rs 350 crore for organic growth activities.
Read Also: Ola Electric IPO: What do the GMP and subscription status indicate? Is it worth applying?
