OLA Electric IPO: Understating the Key Details of the E2W Offering – Equitypandit
Ola Electric Mobility Limited has announced its plans to launch its Initial Public Offering (IPO) to raise Rs 5,500 crore through a fresh equity issue and an Offer-for-sale (OFS) of 95,191,195 equity shares. However, the share allotment date and listing date, along with the price band and lot size, are yet to be disclosed.
About the Company
Ola Electric Mobility Limited was founded in 2010 and is one of the biggest mobility platform in India. The company was founded by Ankit Bhati and Bhavish Aggarwal, having it’s headquarter located in Bangalore. The company is a pure electric vehicle (EV) player in India, developing vertically integrated technology and manufacturing capabilities for EVs and their components, including cells.
They produce EVs and essential components such as battery packs, motors, and vehicle frames at the Ola Future factory. Their business strategy centres on leveraging the electrification of mobility in India while also exploring opportunities to export their EVs to select international markets in the future.
Ola Electric has delivered four products and announced six new ones since its first product announcement in August 2021. They began delivering their first EV model, the Ola S1 Pro, in December 2021, followed by the Ola S1 in September 2022, the Ola S1 Air in August 2023, and the Ola S1 X+ in December 2023.
On 15 August 2023, they unveiled additional new EV scooter models: the Ola S1 X (2 kWh) and the Ola S1 X (3 kWh), alongside the Ola S1 X+. They also introduced a line-up of motorcycles with four models: Diamondhead, Adventure, Roadster, and Cruiser. Ola Electric plans to commence delivery of the Ola S1 X (2 kWh) and the Ola S1 X (3 kWh) in the first half of Fiscal 2025 and the motorcycles in the first half of Fiscal 2026.
The company became one of the best-selling electric two wheeler (E2W) brand in India in terms of monthly E2W registrations on the VAHAN Portal of the Ministry of Road Transport and Highways.
The company operates its own direct-to-customer (D2C) omnichannel distribution network, which comprises 935 experience centres and 414 service centres situated across India.
As of 31 October 2023, it had a total of 3,733 on-roll employees and 2,844 off-roll employees.
Financials of Ola Electric Mobility:
Over the last three financial years, the company’s total revenue and net profit are as follows:
– FY21: Total revenue of Rs 106 crore, net loss of Rs 199.23 crore
– FY22: Total revenue of Rs 456 crore, net loss of Rs 784.15 crore
– FY23: Total revenue of Rs 2,783 crore, net profit of Rs 1,472.08 crore
– FY24 (3M): Total revenue of Rs 1,278 crore, net loss of Rs 267.15 crore
The company has consistently grown revenue and covered its losses during this period.
- The average earnings per share (EPS) over the last three financial years is Rs. -3.91, and the average Return on Net Worth (RoNW) is -62.47%.
- The company’s issue is competitively priced at a price-to-book value (P/BV) based on its Net Asset Value (NAV) of Rs. 6.26 as of 31 December 2023.
Amount in Crores (Rs.)
| Period End | 30 June 2024 | 31 March 2023 | 31 March 2022 | 31 March 2021 |
| Assets | 5,711 | 5,573 | 5,395 | 2,112 |
| Revenue | 1,278 | 2,782 | 456 | 106 |
| Profit After Tax | -267.15 | -1,472.08 | -784.15 | -199.23 |
| Net Worth | 2,111 | 2,356 | 3,661 | 1,970 |
| Reserves and Surplus | -1,625 | -1,380 | -68 | -1,999 |
| Total Borrowing | 701 | 700 | 523 | – |
Objectives of Ola Electric for IPO:
The company aims to achieve the following through this offer:
- To raise Rs 5,500 crore through a fresh equity issue.
- Sell up to 95,191,195 Equity Shares by the Promoter Selling Shareholders.
It expects this strategic move to:
- To fund capital expenditure for the subsidiary, OCT, aimed at expanding the cell manufacturing plant’s capacity from 5 GWh to 6.4 GWh, which is classified as phase 2 under the expansion plan.
- To repay or prepay, either in part or in full, borrowings obtained by the subsidiary OCT.
- For research and product development.
- To fund organic growth initiatives.
- For general corporate purposes.
IPO offerings
Ola Electric Mobility Ltd initially filed a Draft Red Herring Prospectus (DRHP) for a combined Initial Public Offering (IPO) consisting of a fresh equity issue worth Rs. 5,500 crores and an offer for sale (OFS) of 95,191,195 equity shares.
Product Portfolio
Ola Electric Mobility Ltd. has a strong product portfolio of four EV scooters, including the Ola S1, Ola S1 Pro, Ola S1 Air, and Ola S1 X+. They also have a product pipeline of other new EV scooter models, the Ola S1 X (kWh) and Ola S1 X (3kWh). In addition, they have announced a new line of motorcycles that comprises four models, including Adventure, Roadster, Cruiser, and Diamondhead.
Conclusion
Given Ola Electric’s strategic positioning as a pioneer of electric two-wheelers, future product portfolio, and financials, applying for this IPO could be a worthy investment. The company’s impressive product line-up, along with the government’s constant support towards lowering India’s carbon footprint, further solidifies its potential in this emerging EV market.
