In a significant move for the electric vehicle (EV) industry in India, Ola Electric is set to make its debut on the stock market. The company, which has rapidly become a major player in the electric two-wheeler segment, has announced the opening of its Initial Public Offering (IPO) on August 2, 2024. This article delves into the details of the IPO and what it means for investors and the EV market in India.
Key Ola Electric IPO Details
- Subscription Period: August 2 – August 6, 2024
- Price Band: Rs 72 – Rs 76 per share
- Total Issue Size: Up to Rs 6,145.56 crore
- Fresh Issue: Rs 5,500 crore
- Offer for Sale: Rs 645.56 crore
- Minimum Bid: 197 equity shares
Allocation of Shares
The IPO has been structured to cater to different categories of investors:
- 10% reserved for retail individual bidders
- 75% allocated to qualified institutional buyers
- 15% set aside for non-institutional buyers
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Current Shareholding Structure of Ola Electric
Understanding the current ownership of Ola Electric provides insight into the company’s structure:
- Bhavish Aggarwal: The CEO holds the largest stake at 36.9%
- SoftBank’s SVF II Ostrich (DE) LLC: Owns 22% of the company
Planned Share Offloading
As part of the IPO process, several key stakeholders will be selling portions of their holdings:
- Bhavish Aggarwal and promoter group Indus Trust: Up to 3,79,15,211 shares and 41,78,996 shares respectively
- SVF II: 2,38,57,268 shares
Utilization of IPO Proceeds
Ola Electric has outlined clear plans for the funds raised through the IPO:
- Cell Manufacturing: Rs 1,226.43 crore for the upcoming Giga factory in Krishnagiri, Tamil Nadu
- R&D: Rs 1,600 crore for research and product development
- Debt Repayment: Rs 800 crore to reduce outstanding borrowings
Ola Electric’s Market Position
The company has established itself as a leader in the electric two-wheeler segment:
- Over 35% market share
- Competing with established players like Bajaj Auto, TVS Motor, Ather, and Hero MotoCorp
Financial Overview of Ola Electric
While Ola Electric has shown impressive growth, it’s important for potential investors to understand the company’s financial position:
- FY23 Consolidated Net Loss: Rs 1,472.08 crore
- Total Outstanding Borrowing (as of October 31, 2023): Rs 1,768.82 crore
The company has acknowledged that it may continue to report losses in the near term due to higher operating expenses related to product and sales expansion.
CEO’s Perspective on EV Growth
Despite some market fluctuations, Bhavish Aggarwal remains optimistic about the future of EVs in India:
- EV penetration in the scooter segment has reached nearly 15% in three years
- Aggarwal believes the EV growth story is still in its early stages
- He acknowledges that cyclical changes, subsidy adjustments, and seasonal factors may impact short-term growth rates
Conclusion: What This Means for the EV Industry
Ola Electric’s IPO marks a significant milestone for the company and the broader EV industry in India. As one of the first major EV manufacturers to go public in the country, this move could pave the way for increased investment and interest in the sector.
For potential investors, the IPO presents an opportunity to be part of India’s growing EV market. However, as with any investment, it’s crucial to consider both the growth potential and the financial risks involved.
As the EV landscape continues to evolve, Ola Electric’s public offering will undoubtedly be closely watched by industry observers, investors, and competitors alike. The success of this IPO could set the tone for future public offerings in the EV space and potentially accelerate the adoption of electric vehicles in India.
