Ola Electric Mobility, India’s leading e-scooter manufacturer, witnessed a significant surge in its market valuation, reaching a staggering $7 billion (Rs 58,558 crore) as its shares jumped by 20% on Friday. The company’s latest valuation represents a remarkable 75% increase over its initial public offering (IPO) valuation of $4 billion (Rs 33,522 crore), marking one of the most substantial gains in the domestic market.
The shares of Ola Electric closed at Rs 133, up from the IPO price of Rs 76, which had garnered a subscription rate just over four times. The recent boost in the company’s stock price follows the launch of its new line of electric motorcycles and investor confidence that the company will reduce costs by manufacturing its own batteries.
The introduction of e-motorcycles is expected to intensify competition in India’s two-wheeler market, the world’s second-largest, where Ola Electric will now compete with established giants like Bajaj Auto, TVS Motor, and Hero Motocorp. The Indian market, dominated by two-wheelers, saw 18 million units sold last year, underscoring the significance of this move by Ola Electric.
Ola Electric had been valued at $5.4 billion in a pre-IPO funding round in September 2023. However, the company reduced its IPO valuation target to $4 billion, reflecting a broader correction in global tech company valuations and aiming to attract more investors to its stock offering. Despite this, some early investors sold their shares at a loss during the IPO.
HSBC, in a note, highlighted the company’s strategy to build its own batteries and manufacture most of its electric vehicle (EV) components domestically. “The e-scooter maker’s plan to build an ‘all-important’ battery and its efforts to make most of its EV parts in the country should attract investors looking to play the electrification theme in India,” HSBC stated. The brokerage maintains a “Buy” rating on Ola Electric’s shares with a price target of Rs 140. “Our target price implies FY28E price/sales of 2.9x and an EV/Ebitda of 39x,” HSBC added.
Despite a wider first-quarter loss reported by Ola Electric on Wednesday, attributed to subsidy cuts, the company’s future prospects appear promising. On Thursday, the company launched a new series of e-motorcycles, signaling its expansion into an untapped segment. Ola Electric plans to equip its vehicles with in-house batteries by the next year, positioning itself as a key player in India’s evolving EV landscape.
Morgan Stanley, commenting on the company’s new offerings, remarked that Ola Electric’s motorcycle line addresses both the “mass and premium” ends of the segment. The brokerage emphasized that the close pricing of Ola’s e-motorcycles to traditional bikes is likely to escalate competition in the market. Additionally, the company’s all-women Future Factory, which has a capacity of 20,000 employees, is expected to capture the attention of Environmental, Social, and Governance (ESG) funds.
As EV adoption continues to rise in India, albeit slowly due to challenges such as range anxiety, insufficient charging infrastructure, and low resale value, Ola Electric’s innovative approach and strategic expansions could pave the way for its sustained growth and dominance in the sector.