Ola Electric Mobility Ltd's IPO: Key Details and Objectives

29 Jul 2024 , 10:00 AM

Ola Electric Mobility Ltd, a prominent player in the electric vehicle (EV) market in India, has announced a price band of ₹72-76 per share for its upcoming initial public offering (IPO). The IPO is set to open for subscription on August 2, with anchor investor bidding starting on August 1 and the issue closing on August 6.

IPO Structure and Financial Details

The IPO comprises a fresh issue of ₹5,500 Crore and an offer for sale (OFS) of up to 84.94 million shares. At the upper end of the price band, the OFS is valued at ₹645.96 Crore, bringing the total issue size to approximately ₹6,145.96 Crore. The estimated market capitalization of the company post-IPO is around ₹33,500 Crore.

Promoters Bhavish Aggarwal and Indus Trust will be offloading 3.79 Crore and 41.79 lakh equity shares, respectively, through the OFS. Among the investors, SVF II Ostrich (DE) LLC, the largest shareholder with a 21.98% stake (equivalent to 8.1 Crore shares post-conversion of CCPS), will sell 2.38 Crore shares in the OFS. Other selling shareholders include Alpha Wave Ventures II LP, Alpine Opportunity Fund VI LP, Internet Fund III Pte, MacRitchie Investments Pte, Matrix Partners India Investments III LLC, Tekne Private Ventures XV, and Ashna Advisors LLP.

Use of IPO Proceeds

The proceeds from the fresh issue will be utilized for several key initiatives:

1. Capacity Expansion: Ola Electric plans to invest ₹1,227.64 Crore to expand the cell manufacturing capacity of its subsidiary, OCT’s Ola Gigafactory, from 5 GWh to 6.4 GWh. The Ola Futurefactory, which is the largest integrated and automated electric two-wheeler (E2W) manufacturing plant in India, will benefit from this expansion.
2. Debt Repayment: The company will use ₹800 Crore to repay the debt incurred by its subsidiary, OET. As of June 15, 2024, the consolidated debt stood at ₹996.67 Crore.
3. Research and Development: A significant portion, ₹1,600 Crore, will be allocated to research and product development, underscoring Ola Electric’s commitment to innovation in the EV space.
4. Business Expansion: An additional ₹350 Crore will be dedicated to business expansion through organic growth initiatives.
5. General Corporate Purposes: The remaining funds will be used for general corporate purposes.

Business Performance and Market Position

Ola Electric delivered its first electric scooter in December 2021 and has since seen substantial growth in revenue, although the company remains loss-making. For the fiscal year ending March 2024, Ola Electric reported a net loss of ₹1,584.4 Crore, up from ₹1,472 Crore in the previous fiscal. However, revenue from operations surged to ₹5,009.8 Crore, marking a 90.4% increase from ₹2,630.9 Crore the previous year.

The company’s EBITDA loss also widened, standing at ₹1,267.6 Crore in FY24, compared to a loss of ₹1,252.4 Crore in FY23. Despite these financial challenges, Ola Electric has achieved impressive sales growth. The company sold 3.29 lakh units in FY24, more than doubling the 1.56 lakh units sold in the previous year. As of the end of FY24, Ola Electric held a 35% market share in the electric two-wheeler (E2W) segment, a significant increase from 21% in the previous year.

Ola Electric operates a direct-to-customer (D2C) omnichannel distribution network across India, comprising 870 experience centres and 431 service centres, providing comprehensive support and engagement for its customers.