The initial public offering (IPO) of Ola Electric Mobility has not quite met the high expectations initially set by the market. Despite a subdued response from investors on the second day of bidding, the IPO was fully subscribed by the close of Monday, August 5. The IPO, which opened for bidding on Friday, August 2, saw a modest 35% subscription on its first day. However, by 4:45 PM on Monday, bids for 49,09,15,035 equity shares were received, surpassing the 46,51,59,451 shares available for subscription. The three-day bidding process will conclude on Tuesday, August 6.
Ola Electric is offering its shares in a price range of Rs 72-76 each. Investors can apply for a minimum of 195 shares, with additional shares available in multiples. The company aims to raise Rs 6,145.56 crore through the IPO, which includes a fresh share sale of Rs 5,500 crore and an offer-for-sale (OFS) of 84,941,997 equity shares.
The retail portion of the IPO was subscribed 2.86 times, while the portion reserved for non-institutional investors (NIIs) saw a subscription of 1.09 times. The employee allocation was heavily oversubscribed at 8.96 times. However, the quota for qualified institutional bidders (QIBs) received only 0.40 times the required bids.
Founded in 2017 and based in Bengaluru, Ola Electric is a leading player in the electric vehicle (EV) sector. The company manufactures electric vehicles and key components such as battery packs, motors, and vehicle frames at its Ola Futurefactory. Despite its promising market position, the company's IPO performance has been impacted by broader market volatility, which has dampened investor sentiment.
The grey market premium (GMP) for Ola Electric has fallen significantly amid this market volatility. Initially, the GMP was Rs 16 when the IPO was announced, but it has now dropped to just Rs 4. This suggests a potential listing gain of about 5% for investors, reflecting cautious optimism in the market.
Brokerage firms have varied opinions on the IPO. Some analysts highlight Ola Electric's leadership in the electric two-wheeler (E2W) market, its focus on EVs, and the supportive regulatory environment as positive factors. However, concerns remain about the company's loss-making history and high valuations. For the fiscal year 2023-24, Ola Electric reported a revenue of Rs 5,243.27 crore and a net loss of Rs 1,584.40 crore, compared to a revenue of Rs 2,782.70 crore and a net loss of Rs 1,472.08 crore for the fiscal year 2022-23.
The company is also involved in advanced EV cell manufacturing at its new Ola Gigafactory. Analysts from Canara Bank Securities suggest a positive long-term outlook due to the growing EV market, favorable regulations, and upcoming product launches. They recommend subscribing to the IPO for long-term benefits.
Ola Electric has set aside Rs 5.5 crore worth of shares for eligible employees, who will receive a Rs 7 discount per share. The allocation for the net offer includes 75% for qualified institutional bidders, 15% for non-institutional investors, and 10% for retail investors. The lead managers for the IPO are BofA Securities India, Axis Capital, Kotak Mahindra Capital, SBI Capital Markets, Citigroup Global Markets India, Goldman Sachs (India) Securities, ICICI Securities, and BOB Capital Markets.
Link Intime India is the registrar for the issue. Shares of Ola Electric are expected to be listed on both BSE and NSE on August 9, Friday. The market will be closely watching the listing to gauge investor sentiment and the broader impact on the EV sector. The performance of Ola Electric's shares post-listing will be a significant indicator of market confidence in the company's growth prospects and the overall potential of the electric vehicle industry in India.
Â
