Ola Electric IPO 2024: Complete Analysis and Key Information
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Ola Electric is a pure electric vehicle (EV) player in India building vertically integrated technology and manufacturing capabilities for EVs and EV components including cells. They manufacture EVs and certain core EV components like battery packs, motors, and vehicle frames at the Ola Future factory. Their business focuses on capturing the opportunity arising from the electrification of vehicles in India and also seeks to export their EVs to select international markets in the future. The EV sector being a sunrise industry has the potential for exponential growth.
The Company was incorporated as ‘Ola Electric Mobility Private Limited’ at Bengaluru, Karnataka on February 3, 2017. The company was promoted by Bhavish Aggarwal. Currently, the Promoter holds 1,361,875,240 Equity Shares in the company representing 36.94% of the issued.
Market Share in 2W EV: 49%
Total Units Sold: 506,817 (Ola S1, Ola S1 Pro, Ola S1 Air, and Ola S1 X+ from inception through March 31, 2024)
Product Announcements: Seven products since August 2021. Announced a line-up of motorcycles (Diamondhead, Adventure, Roadster, and Cruiser) on August 15, 2023 with deliveries expected in the first half of Fiscal 2026.
Upcoming Launch: Event on August 15, 2024.
Ola Electric operates a direct-to-customer (D2C) omnichannel distribution network across India comprising:
Became the best-selling E2W brand in India within 9 months of delivering their first EV scooter in December 2021 based on monthly E2W registrations on the VAHAN Portal of the Ministry of Road Transport and Highways (VAHAN).
R&D Locations: India, the United Kingdom (UK), and the United States (US) focused on designing and developing new EV products and core EV components.
EV Hub: In the process of building an EV hub in Krishnagiri and Dharmapuri districts in Tamil Nadu, India which includes the Ola Futurefactory, upcoming Ola Gigafactory, and co-located suppliers.
Battery Innovation Centre (BIC): Located in Bengaluru, India focused on developing cell and battery technology and manufacturing processes for forthcoming cell manufacturing at the Ola Gigafactory.
Aggregate Amount: Up to Rs. 5500 Cr
Purpose: The funds from the fresh issue will primarily be used for capital expansion and research and development initiatives.
Equity Shares: Up to 84,941,997 Leads up to ?646 Crore
Purpose: The offer for sale will provide an exit opportunity for existing shareholders and enhance liquidity in the stock market.
Date: August 2 - August 6, 2024
Total Issue Size: Rs. 6112 – 6146 Cr
Price Band: Rs. 72 - 76 per share
Post Issue Implied Market Cap: Rs. 32048 – 33522 Cr
| Particulars | Amount (Rs. Cr) |
|---|---|
| Capital expenditure to be incurred by the subsidiary OCT for the Project | 1227.64 |
| Repayment or pre-payment in full or part of the indebtedness incurred by the Subsidiary OET | 800 |
| Investment into research and product development | 1600.00 |
| Expenditure to be incurred for organic growth initiatives | 350 |
| Other | 1522.36 |
| Total | 5500.00 |
Bhavish Aggarwal
Founder, Chairman, Managing Director, and Promoter: Bhavish Aggarwal is the driving force behind Ola Electric and ANI Technologies Pvt Ltd (Ola Cabs).
Foundation and Growth: Founded Ola Cabs in 2010 at the age of 25. Known for his expertise in rapidly scaling and expanding businesses.
Role: Currently serves as Chairman and Managing Director of Ola Electrical.
Innovative and Visionary: Bhavish is recognized for his innovative approach and vision across various Tech Businesses
Scaling Businesses: Demonstrated ability to scale businesses quickly as seen with the rapid growth of Ola Cabs and Ola Electric.
Financial Performance and Issues:
Profitability Concerns: Despite his strengths, Bhavish has struggled to convert businesses from loss-making to profitable ventures. This is evident across multiple subsidiaries:
Diversification and Focus: Bhavish is known for his eagerness to explore new business opportunities. However, this has led to challenges as he often enters new ventures quickly without ensuring existing businesses achieve profitability. This pattern indicates a tendency to become bored too fast leading to a lack of sustained focus on individual ventures.
In conclusion, while Bhavish Aggarwal is a smart and visionary leader with a proven track record of scaling businesses, his ventures have consistently struggled with profitability. His inclination to diversify rapidly may be contributing to these financial challenges.
Rapid Adoption: The penetration of electric two-wheelers (E2Ws) in India has grown significantly, increasing over 6x between FY 2021 and FY 2022 and over 2x between FY 2022 and FY 2023 reaching a penetration level of ~4.5%
Market Reach: E2Ws are not only popular in metro cities but have also penetrated non-metro areas like Kolhapur (23%) and Surat (15%).