Introduction
The Indian electric vehicle (EV) industry is set to witness a groundbreaking moment as Ola Electric, backed by SoftBank Group and Temasek, filed its preliminary draft papers on December 22, with the Securities and Exchange Board of India (SEBI) to raise Rs5,500 crore through an initial public offering (IPO) 1. This IPO will mark a significant milestone as it will be the first IPO by an Indian EV maker and the first by a two-wheeler maker in India since 2008 . With a mission to revolutionize the EV industry, Ola Electric aims to create sustainable and accessible mobility solutions for the Indian market.
The Ola Electric IPO Details
The Ola Electric IPO proposes a fresh issue of equity shares worth up to ₹5,500 crore and an offer for sale (OFS) of 95,191,195 equity shares at a face value of ₹10 1. The founder of Ola Electric, Bhavish Aggarwal, plans to sell up to 47.4 million shares in the IPO 2. The IPO dates and the offer price have not been announced yet, but reports suggest that the public issue may open in early 2024.
Allocation for Each Category of Investor
The IPO process follows a book-building approach, with specific allocations for different categories of investors 1. The allocation is as follows:
- 75% of the issue for qualified institutional buyers (QIBs)
- Up to 15% for non-institutional investors (NIIs)
- Not more than 10% for retail individual bidders
Use of Funds
The net proceeds from the IPO will be allocated for various purposes, as stated in the Draft Red Herring Prospectus (DRHP) :
- ₹1,226.4 crore for Ola Cell Technologies’ Gigafactory project
- ₹1,600 crore for research and development (R&D) investments
- ₹350 crore for organic growth initiatives and general corporate purposes
- ₹800 crore to repay/pre-pay debts of Ola Electric Technologies (OET)
Ola Electric’s Business Model and Financials
Business Model
Ola Electric’s business model is built on three key scalable platforms :
- R&D and technology platform: Ola Electric has in-house design and development capabilities across EV technologies and components.
- Adaptable manufacturing and supply chain platform: The company has established a robust manufacturing and supply chain infrastructure.
- D2C omnichannel distribution platform: Ola Electric has 935 experience centers across India, including service centers, providing a direct-to-consumer distribution model.
Revenue Surge and Product Portfolio
In the fiscal year 2023, Ola Electric witnessed a substantial increase in revenue from operations, reaching ₹2,630.93 crore compared to ₹373.42 crore in the previous year . The company’s revenue from operations for the quarter ended June 30, 2023, was reported at ₹1,242.75 crore . Ola Electric introduced its first EV model, the S1 Pro, in August 2021, and currently has a portfolio of five scooter models .
Losses and Risk Factors
While Ola Electric has experienced revenue growth, it has also incurred losses. In FY23, the company reported a net loss of ₹1,472 crore, compared to ₹784.1 crore in the previous fiscal year . The IPO carries certain risk factors, including the company’s limited operating history and the potential for continued losses in the near term .
Ola Electric’s Impact and Future Plans
Sales Highlights and Market Share
Ola Electric has made significant strides in the Indian EV market. In November 2023, the company achieved its highest-ever sales, reaching 30,000 units and capturing a 35% market share 1. Since its launch in December 2021, Ola Electric has sold over 300,000 electric vehicles, with 9,841 e-scooters sold in December alone .
Ola Electric’s Vision for the Future
Ola Electric aims to expand its presence in the international market by exploring opportunities to export EVs . The company plans to leverage its R&D capabilities and manufacturing infrastructure to develop new EV models and technologies, contributing to the growth and adoption of electric mobility in India and beyond.
Conclusion
The Ola Electric IPO represents a significant milestone in the Indian EV industry. With its innovative business model, impressive revenue growth, and commitment to sustainability, Ola Electric is poised to reshape the future of mobility. As the company continues to invest in R&D, expand its product portfolio, and capture a larger market share, it is well-positioned to drive the transition to electric mobility in India and make a lasting impact on the global stage.
Disclaimer: This is not a financial advice and do your own research before making any investment decision.
