Ola Electric

Ola Electric IPO Launch Today! Shares Subscribed 4.27x – What You Need to Know

Ola Electric Mobility Ltd. is set to make its debut on the stock exchanges today, August 9. The company’s IPO has been oversubscribed by 4.27 times, reflecting strong interest from market participants. However, the stock is expected to list at a discount, given the current market conditions.

Grey Market Premium (GMP): Ahead of the listing, Ola Electric shares are trading with a negative GMP of ₹-3. With the upper price band set at ₹76, the stock is anticipated to list around ₹73, representing a discount of approximately 4% from the issue price.

Market Sentiment and Analysis:

• Shivani Nyati of Swastika Investmart anticipates a subdued listing for Ola Electric. Despite the company’s ambitious vision to become a global leader in electric vehicles (EVs) and significant investments in research and development (R&D), its current financial performance, characterized by consistent losses, raises concerns. Factors such as high competition, pricing pressures, and employee attrition contribute to the challenges facing the company.
• Parth Shah of StoxBox expects the shares to list at a discount of about 3% above the issue price. He advises investors to hold onto the shares from a medium to long-term perspective. Shah is optimistic about Ola Electric’s future due to the positive outlook for the EV market, favorable regulatory environment, the large quantum of the fresh issue in the IPO, and the company’s plans for new models and a Gigafactory for cell manufacturing.

IPO Details:

• Subscription: The IPO was open for bidding from August 2 to August 6 and was subscribed 4.27 times.
• Price Band: ₹72-76 per share.
• Lot Size: 195 shares.
• Total Amount Raised: ₹6,146 crore, comprising a fresh share sale of ₹5,500 crore and an offer-for-sale (OFS) of up to 8.49 crore shares.

Use of Proceeds: Ola Electric plans to allocate ₹1,600 crore of the net proceeds for investment in research and development. The company has acknowledged the risks associated with these investments, noting that there is no assurance that they will result in tangible assets or anticipated results.

Company Profile: Ola Electric is a pure EV player in India with integrated technology and manufacturing capabilities. It has delivered seven EV products and announced four new ones. The company operates through an omnichannel distribution network, including 870 experience centers and 431 service centers as of March 31, 2024. Despite its expansion, the company has been loss-making, with a loss of ₹1,584 crore in the financial year 2024, compared to ₹1,472 crore in the previous year.

Advantages

1. Strong Market Interest: The IPO was oversubscribed 4.27 times, reflecting significant interest from institutional and retail investors.
2. Future Growth Potential: Positive outlook for the EV market, favorable regulatory environment, and planned investments in new models and manufacturing capabilities could benefit the company in the long term.
3. Expansion of Network: The company’s extensive omnichannel distribution network and multiple experience centers enhance its market presence and accessibility.
4. Investment in R&D: Significant allocation of funds towards R&D could drive innovation and future growth for the company.

Disadvantages

1. Expected Discount on Listing: The stock is anticipated to list at a discount of around 4% from the issue price, indicating possible initial market skepticism.
2. Financial Losses: Ola Electric has been incurring consistent losses, with no immediate assurance of turning profitable.
3. High Competition: The EV market is highly competitive, posing challenges to Ola Electric’s market share and pricing strategies.
4. Risk in R&D Investments: There is no guarantee that the investments in R&D will yield the anticipated results or tangible assets.

FAQs

1. When will Ola Electric shares list on the stock exchanges?

• Ola Electric shares are set to list today, August 9.

2. What is the expected listing price of Ola Electric shares?

• The shares are expected to list at around ₹73, which is a discount of about 4% from the upper price band of ₹76.

3. How much was the Ola Electric IPO subscribed?

• The IPO was subscribed 4.27 times.

4. What is the Grey Market Premium (GMP) for Ola Electric shares?

• The GMP is currently ₹-3, indicating a potential discount on listing.

5. What is the price band for Ola Electric’s IPO?

• The price band is ₹72-76 per share.

6. How will Ola Electric use the proceeds from the IPO?

• The company plans to use ₹1,600 crore for investment in research and development.

7. What are the financial challenges facing Ola Electric?

• The company has faced consistent losses, high competition, pricing pressures, and employee attrition.

Conclusion

Ola Electric’s IPO marks a significant event for the EV industry, reflecting strong market interest despite anticipated challenges. While the stock is expected to list at a discount due to current market conditions and financial performance concerns, the company’s long-term prospects remain promising. Investors should be cautious of the initial listing price and consider the potential for future growth driven by ongoing investments and market developments. The listing will provide valuable insights into market sentiment and the company’s ability to navigate its financial and operational challenges.

Ola Electric

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