Ola Electric Mobility Ltd, a prominent player in the electric vehicle (EV) sector, has announced the price band for its upcoming initial public offering (IPO) at Rs 72-76 per share. The IPO will open for subscription on August 2, 2024, with anchor investor bidding commencing a day earlier on August 1. The issue is set to close on August 6.
The IPO includes a fresh issue of shares worth Rs 5,500 crore and an offer for sale (OFS) of up to 84.94 million shares. At the upper end of the price band, the OFS is valued at Rs 645.96 crore, bringing the total issue size to Rs 6,145.96 crore. Post-IPO, the company’s market capitalization is expected to be approximately Rs 33,500 crore.
Promoters Bhavish Aggarwal and Indus Trust will be selling 3.79 crore and 41.79 lakh equity shares respectively in the OFS. Among the other selling shareholders are SVF II Ostrich (DE) LLC, the largest stakeholder with a 21.98 percent stake, offloading 2.38 crore shares, along with Alpha Wave Ventures II LP, Alpine Opportunity Fund VI LP, Internet Fund III Pte, MacRitchie Investments Pte, Matrix Partners India Investments III LLC, Tekne Private Ventures XV, and Ashna Advisors LLP.
Utilization of IPO Proceeds
Ola Electric plans to utilize Rs 1,227.64 crore from the fresh issue proceeds for expanding the capacity of its subsidiary, Ola Cell Technologies (OCT), at the Ola Gigafactory from 5 GWh to 6.4 GWh. This expansion is a part of the company’s strategy to bolster its production capabilities.
Additionally, Rs 800 crore will be allocated towards repaying the debt incurred by its subsidiary, Ola Electric Technologies (OET). As of June 15, 2024, the company’s consolidated debt stood at Rs 996.67 crore. Furthermore, Rs 1,600 crore will be invested in research and product development, and Rs 350 crore will be used for business expansion through organic growth initiatives. The remaining funds will be used for general corporate purposes.
Financial Performance and Market Position
Ola Electric, which delivered its first EV scooter in December 2021, has shown significant revenue growth despite recording losses. For the fiscal year ended March 2024, the company’s net loss widened to Rs 1,584.4 crore from Rs 1,472 crore in the previous fiscal. Revenue from operations surged by 90.4 percent to Rs 5,009.8 crore, up from Rs 2,630.9 crore in FY23. The loss at the EBITDA level stood at Rs 1,267.6 crore, compared to a loss of Rs 1,252.4 crore in the previous year.
The company’s direct-to-customer (D2C) omnichannel distribution network across India includes 870 experience centres and 431 service centres. Ola Electric sold 3.29 lakh units in FY24, more than doubling its sales from 1.56 lakh units in FY23. By the end of fiscal 2024, Ola Electric held a 35 percent market share in the electric two-wheeler (E2W) segment, a significant increase from the 21 percent market share in the previous fiscal.
The Ola Futurefactory
Ola Electric’s manufacturing hub, the Ola Futurefactory, is the largest integrated and automated E2W manufacturing plant in India in terms of production capacity. The facility is crucial for the company’s ambitions in the EV market, enabling it to produce key components such as battery packs, motors, and vehicle frames.
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