Ola Electric’s IPO: Initial Subscription At 0.38 Times With Retail Portion Over-Subscribed

The much-anticipated Initial Public Offering (IPO) of Ola Electric Mobility was subscribed 0.38 times by the end of Day 1. The portion reserved for retail investors was subscribed 1.7 times, according to publicly available data.

The IPO opened today and will continue until Tuesday. Bengaluru-based Ola Electric, a pure electric vehicle company, has set the price band for its shares at ₹72 to ₹76.

An IPO refers to the process of 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 shares thereafter, with a minimum bid amount of ₹14,820.

The IPO includes a fresh issue of equity shares aggregating up to ₹5,500 crore and an offer for sale (OFS) of up to 84,941,997 equity shares. The shares will be listed on both BSE and NSE.

The offer is being made through the Book Building Process, where at least 75% of the net offer will be allocated to qualified institutional buyers, no more than 15% to non-institutional bidders, and no more than 10% to retail individual bidders.

Ola Electric is possibly the first pure EV company in India to go public. Its red herring prospectus highlights the company’s history of losses, including ₹1,584 crore in FY 2023-24, ₹1,472 crore in FY 2022-23, and ₹784 crore in FY 2021-22.

Operating History:

Incorporated in 2017, Ola Electric delivered its first electric scooter in December 2021. Since then, it has introduced several products, including the Ola S1 Pro, Ola S1, Ola S1 Air, and various models of the Ola S1 X.

Due to its limited operating history, the company has limited historical data to judge its future performance and profitability. The red herring prospectus notes that failing to address risks and challenges in the EV industry could materially affect its business.

Ola Electric plans to use ₹1,600 crore of the net proceeds for research and development. It also faces risks related to supply chain disruptions and price increases for components. The company sources some raw materials from China, exposing it to potential risks from changes in government policies or trade tensions.

The company benefits from government incentives such as FAME Phase II subsidies and GST reimbursements. Any reduction or elimination of these incentives could increase vehicle prices and affect customer demand.

Bhavish Aggarwal is the Founder, Chairman, Managing Director, and Promoter of the company.

(With ANI Inputs)

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