After receiving lackluster response for its initial public offering (IPO), Ola Electric Mobility shares made soft debut on the domestic bourses, in an otherwise strong broader market. The shares of India’s largest electric two-wheeler manufacturer listed flat at ₹76 apiece at par with the issue price on the NSE. On the BSE, the auto stock listed at ₹75.99, a tad lower than the IPO price. In sharp contrast, the BSE Sensex was trading 800 points, 1%, higher at 79,686, and the NSE Nifty was up by 278 points, or 1.15%, at 24,395 levels.
Post listing, shares of Ola Electric rose as much as 4.82% to ₹79.66 on the BSE, while the market capitalisation climbed to ₹35,137 crore.
The muted listing of Bhavish Aggarwal-led EV company was in line with Street expectations as Ola Electric shares were available at a discount of ₹3 in the grey market today. Ahead of the opening of the IPO, the Bangalore-based company was commanding a grey market premium of ₹16.5 in the unlisted market as of July 30, which gradually dropped to a discount of ₹3 as the three-day IPO closed on August 6.
“This flat performance, coupled with a mere 4.45 times subscription, underscores the challenges the company faces in gaining investor confidence,” says Shivani Nyati, Head of Wealth, Swastika Investmart Ltd.
Nyati says that Ola Electric’s vision for the EV market is ambitious, the company’s current financial performance, marked by consistent losses, and the highly competitive landscape have tempered investor enthusiasm. The negative grey market sentiment prior to listing further reflected these concerns.
She adds the flat listing highlights the need for Ola to demonstrate a clear path to profitability and navigate the complexities of the EV market effectively. “Investors are suggested to exit and book a minor profit, but those who want to take risks may hold their position by keeping a stop loss below ₹70,” she says.
The highly-anticipated ₹6,146 crore IPO of Ola, which opened on August 2, was subscribed 4.45 times, led by qualified institutional buyers (QIBs) as the quota reserved for them was booked 5.53 times. The retail portion was subscribed 4.05 times, followed by 2.51% in non-institutional investors (NIIs) segment. The quota for the employee was the most subscribed by 12.38 times. The EV manufacturer had reserved 75% of the issue for qualified institutional buyers, 15% for non-institutional bidders, and the remaining 10% for retail investors.
The issue comprised a fresh issue of ₹5,500 crore and an offer for sale (OFS) of up to 8.49 crore shares by promoters and existing shareholders. At the upper end of the IPO price band of ₹72-76 per share, the company raised ₹645.96 crore via OFS. The minimum lot size for an application was 195 shares or ₹14,820.
The company intends to use capital raised from fresh equities for capital expenditure to be incurred by the subsidiary, OCT for the Ola Gigafactory project and repayment of indebtedness incurred by subsidiary, OET. A part of the capital will be used for investment into research and product development, funding organic growth initiatives, and general corporate purposes.
Established in 2017, Ola Electric Mobility is a wholly-owned subsidiary of ANI Technologies, the parent entity of Ola Cabs. Over the years, Bhavish Aggarwal-led company has become India’s leading manufacturer of electric vehicles with the largest integrated and automated E2W manufacturing plant, spread across 400+ acres in Krishanagiri, Tamil Nadu.
It manufactures EVs and core EV components such as battery packs and motors at Ola Futurefactory, its manufacturing facility in Krishnagiri. The company is in the process of building a EV hub in Krishnagiri and Dharmapuri districts in Tamil Nadu, India, which includes the Ola Futurefactory, upcoming Ola Gigafactory and co-located suppliers in Krishnagiri district.
Ola Electric logged a net loss of ₹1,584.4 crore in the financial year 2023-24, from ₹1,472 crore in the previous fiscal. Revenue from operations, however, jumped 90.4% to ₹5,009.8 crore as compared to ₹2,630.9 crore in the last fiscal. The loss at the EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) rose to ₹1,267.6 crore in FY24, from a loss of ₹1,252.4 crore in FY23.
Kotak Mahindra Capital Company Limited, Citigroup Global Markets India Private Limited, BofA Securities India Limited, Goldman Sachs (India) Securities Private Limited, Axis Capital Limited, ICICI Securities Limited, SBI Capital Markets Limited and BOB Capital Markets Limited are the book-running lead managers, and Link Intime India Private Limited is the registrar of the offer.
The article originally appeared on Fortune India.