The initial public offering (IPO) of Ola Electric Mobility Limited, a highly anticipated event, is set to open for subscription on Friday. The Bengaluru-based company, known for its focus on electric vehicles (EVs), has set the price band for the IPO at Rs 72 to Rs 76 per share. The subscription period will run from Friday to Tuesday, August 6, 2024.
An IPO involves offering shares of a private corporation to the public for the first time. Investors can bid for a minimum of 195 equity shares and in multiples of 195 thereafter, with a minimum investment of Rs 14,820 for retail investors. The IPO includes a fresh issue of equity shares totaling up to Rs 55,000 million (or Rs 5,500 crore) and an offer for sale (OFS) of up to 84,941,997 equity shares. The shares will be listed on both the BSE and NSE.
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The offering is being made through the Book Building Process, with at least 75 percent of the net offer allocated to qualified institutional buyers, no more than 15 percent to non-institutional bidders, and no more than 10 percent to retail individual bidders.
Ola Electric is poised to become the first pure EV company in India to go public. Despite its ambitious plans, the company has highlighted its financial challenges in its red herring prospectus, noting losses of Rs 1,584 crore in the financial year 2023-24, Rs 1,472 crore in 2022-23, and Rs 784 crore in 2021-22.
Founded in 2017, Ola Electric delivered its first electric scooter in December 2021. The company has since released seven products and announced several new ones. Their EV models include the Ola S1 Pro, Ola S1, Ola S1 Air, and various versions of the Ola S1 X.
Reflecting on the company’s growth, Krsnaa Mehta, the founder of India Circus, remarked, “Our new store in Mumbai underscores our deep-rooted connection with this vibrant city. It reflects our commitment to providing culturally inspired products that enrich the lives of our customers.”
Ola Electric aims to utilize Rs 16,000 million from the net proceeds for research and development. The company manufactures some EV components and sources others from domestic and foreign suppliers, acknowledging potential risks in supply and pricing.
In the fiscal years 2024, 2023, and 2022, imported supplies accounted for 37.03 percent, 31.11 percent, and 29.76 percent of the cost of materials consumed, respectively, while domestic supplies made up the remainder.
Ola Electric also benefits from government incentives like the FAME Phase II subsidies, Tamil Nadu government subsidies, and goods and services tax reimbursements. The company cautioned that any reduction or elimination of these incentives could impact the retail price and customer demand for their EVs.
Additionally, Ola Electric plans to continue sourcing raw materials from China for cell manufacturing, highlighting potential risks from political tensions or changes in trade policies that could disrupt supply or increase costs.
InCred Equities, a research and trading firm, expressed optimism about the Ola IPO but noted potential quarterly volatility due to policy changes and delays in the EV cell plant, which may limit stock price gains.
Bhavish Aggarwal, the founder, chairman, and managing director, and the promoter of Ola Electric, leads the company in this significant phase of its growth.
(With ANI Inputs)
