With a 39% market share, Ola Electric dominates sales of electric scooters in India, after launching its first model just three years ago. 
| Photo Credit: Reuters

SoftBank-backed Ola Electric Mobility’s shares rose 10% in their trading debut on Friday (August 9, 2024), valuing the company at ₹369.45 billion ($4.40 billion) after the first stock offering by a pure-play electric vehicle maker in India.

The stock had listed flat to its initial offer price at ₹76 on the National Stock Exchange in a broader market that was up 1%. Ola Electric’s $734 million initial public offering, India’s biggest so far in 2024, drew about $1.8 billion in bids this week.

With a 39% market share, Ola Electric dominates sales of electric scooters in India, after launching its first model just three years ago. However, while Ola’s revenues have soared, it is yet to report a profit.

In the year to the end of March 2024, the company’s sales grew 90% from the previous year, but its losses widened by 8%.

The company, whose share from the IPO was about $660 million, is planning to invest most of the proceeds in research and development and its battery cell manufacturing unit.

Ola Electric has pinned its profitability on manufacturing its own battery cells for its scooters, which should make them more affordable. It is targeting commercial production of the battery cells by early 2025.

Ola Electric Mobility Ltd., which is into manufacturing of electric two-wheelers, has announced an initial public offering (IPO) to raise upto ₹6,145.56 crore from the capital market. 

The price band of the IPO has been fixed at ₹72-76 per equity share of a face value of ₹10 each. The IPO will open on August 2 and close on August 6. Investors can bid for a minimum of 197 shares and in multiples of 197 shares thereafter. The IPO consists of fresh issue of up to ₹5,500 crore and an offer for sale (OFS) of up to 8,49,41,997 equity shares by promoter selling shareholders and investor selling shareholder amounting to ₹645.56 crore at the upper price band. 
From the proceeds of the fresh issue, about ₹1,228 crore will be used for capital expenditure incurred by the subsidiary OCT; ₹800 crore for repayment or pre-payment, in full or part, of the indebtedness incurred by the subsidiary, OCT; ₹1,600 crore for investment into research and product development; ₹350 crore for expenditure to be incurred for organic growth initiatives and general corporate purposes.

Bhavish Aggarwal, Chairman and Managing Director, Ola Electric Mobility Ltd., while announcing the IPO said, “We are holding a strong leadership position in the Indian automotive market. We have focused our attention in the EV space. We have a portfolio of 7 scooters and have announced to introduce 4 motorcycles.”

“Our model is vertically integrated across R&D and technology, manufacturing, supply chain, sales and service, and charging facilities,” he said, adding that the company was in the process of building its EV hub in Krishnagiri and Dharmapuri districts of Tamil Nadu for which the State Government had allocated 2,000 acres of land.

Ola Electric’s S1 Air e-scooters are pictured inside its manufacturing facility in Pochampalli, Tamil Nadu. The company plans to launch its IPO next week.
| Photo Credit: Reuters

SoftBank-backed Ola Electric’s IPO will open for retail subscription on Aug. 2, the electric scooter maker said on July 27, 2024, a stock offering that according to two sources will value the company between $4.2 billion to $4.4 billion.

The issue, which will open for institutional investors a day earlier on Thursday, will close for retail subscriptions on Aug. 6, the final IPO prospectus filing showed. Ola founder Bhavish Aggarwal will offload 37.9 million shares in the IPO, around 20% lower than estimated in the draft IPO prospectus.

Ola’s expected valuation is about 18.5% to 22% lower than in its last funding round in September, which was led by Singapore’s investment firm Temasek and valued the country’s largest e-scooter maker at $5.4 billion.

“Some marquee investors are being offered the IPO at the lower end of the $4.2 billion-$4.4 billion valuation,” said one of the sources with direct knowledge of IPO planning.

Ola is planning the IPO at a lower valuation to ensure higher participation from investors bidding for the IPO shares, the two sources said.

Ola Electric’s IPO, a first for an Indian EV maker, is also one of the biggest in a year where the country’s equities markets have scaled multiple record highs and also overtaken Hong Kong to become the world’s fourth-largest bourse.

Electric two-wheeler company Ola Electric Mobility’s proposed ₹5,500 crore IPO has received the go-ahead from Sebi, paving the way for the company to tap the market with a significant part of the proceeds to be used on capacity expansion of its cell manufacturing plant and revving up R&D.

Ola Electric as well as Bain Capital-backed Emcure Pharmaceuticals received Sebi’s approval to raise funds through initial public offerings (IPOs), an update with the markets regulator showed on Thursday.

The two companies, which filed their preliminary IPO papers with Sebi in December 2023, obtained observations on June 10, it added. In Sebi’s parlance, its observations means its go-ahead to float the public issue.

Ola Electric’s proposed IPO is a combination of a fresh issue of equity shares up to ₹5,500 crore and an offer for sale (OFS) of 9.52 crore equity shares by promoters and investors, according to the draft red herring prospectus (DRHP).

For Ola Electric, the IPO will provide the much-needed impetus to invest in enhancing cell manufacturing capacity and research and development on future technologies and products.

According to its draft papers, Ola Electric Mobility Ltd (OEML) plans to utilise ₹1,226.43 crore out of the proceeds of its ₹5,500 crore public issue on capacity expansion of its cell manufacturing plant to 6.4 GWh from 5 GWh.

The company is also looking to use ₹1,600 crore from the fresh fund on research and product development, while another ₹800 crore will be deployed to repay debts.

In its DRHP, OEML said the Phase 1 (a) and Phase 1 (b) of the set up and expansion of the Ola Gigafactory at Krishnagiri district in Tamil Nadu will be funded from internal accruals and long-term borrowings availed by its arm Ola Cell Technologies Pvt Ltd (OCT).

The Phase 1 (a) is expected to be completed by March 2024 and the gigafactory will have a capacity of 1.4 GWh. In the Phase 1 (b), the capacity will be increased to 5 GWh by October 2024. These will be funded from internal accruals and long-term borrowings availed by OCT, it said.

The Phase 2 of the expansion envisions scaling up the capacity to 6.4 GWh by April 2025 and take it up to 20 GWh by second quarter of calendar year 2026.

In the details of the objects of the IPO, the company said a portion of the proceeds will be used for capital expenditure to be incurred by OCT for expansion of the capacity of cell manufacturing plant from 5 GWh to 6.4 GWh.

“A portion of the net proceeds from the fresh issue aggregating to ₹1,226.43 crore shall be utilised for funding the project,” it said, adding, that the boards of OCT and the company pursuant to their resolutions each dated December 22, 2023, have consented and taken note of the allocation.

OEML which had on August 15, 2023, announced a line-up of electric motorcycles— Cruiser, Adventure, Roadster and Diamondhead— and expects to begin delivery of the motorcycles in the first half of fiscal 2026.

On future product launch plans, the company said, “We plan to further launch affordable mass market Ola S1 models, including E2Ws (electric two-wheelers) targeted at the personal, business-to-business and last-mile delivery segment by first half of fiscal 2025.”

It further said, “We also plan to commence delivery of our motorcycles, which we announced on August 15, 2023, by the first half of fiscal 2026. We plan to further expand our product portfolio to also cover mass market motorcycles to capture a broader base of consumers across different product types and price points in the long run.”

On Emcure Pharmaceuticals, the company’s proposed IPO is a combination of fresh issuance of equity shares worth ₹800 crore and an OFS of 1.36 crore equity shares by promoters and existing shareholders, as per the draft red herring prospectus.

Those selling shares in the OFS include promoter Satish Mehta and investor BC Investments IV Ltd, an affiliate of US-based private equity major Bain Capital.

Currently, Satish Mehta holds a 41.92% stake in the company and BC Investments owns a 13.09% stake.

Proceeds of the fresh issue will be used towards payment of debt and for general corporate purposes.