Ola Electric Mobility, the first pure EV company, is set to launch its public issue today in a price band of ₹72-76 a share.

The issue size of ₹6,145.6 crore is at the upper price band. The IPO consists of a fresh issue of shares worth ₹5,500 crore and an offer-for-sale (OFS) of up to 8.49 crore shares worth ₹645.6 crore. Ola co-founder Bhavish Aggarwal will sell 3.79 crore shares, and promoter group Indus Trust 41.79 lakh shares in the OFS. The IPO will close on August 6.

Investors can bid for a minimum of 195 equity shares and in multiples of 195 equity shares thereafter. The minimum amount required by a retail investor to bid for the Ola Electric IPO is ₹14,820.

The offer is being made through the book-building process, wherein not less than 75 per cent of the net offer will be available for allocation to qualified institutional buyers, not more than 15 per cent of the net offer will be available for allocation to non-institutional bidders, and not more than 10 per cent for allocation to retail individual bidders. The company has also reserved shares for its employee, who will get a discount of 7 per share.

Marqee investors

As part of the IPO, Ola Electric Mobility has mobilised ₹2,763 crore from anchor investors. The anchor round saw participation from a host of investors such as FPIs, domestic mutual funds and insurance companies. The company has allotted 36.35 crore equity shares to 84 funds at ₹76 apiece, aggregating to a transaction size of ₹2,763 crore.

Among them are SBI Mutual Fund (MF), HDFC MF, Nippon India MF, Sundaram MF, Bandhan MF, Bharti Axa Life Insurance Company, Kotak Mahindra Life Insurance Company, Government Pension Fund Global, Nomura India Investment Fund, Goldman Sachs (Singapore) Pte Ltd and Fidelity.

Utility of funds

Funds raised will be used for expansion of the installed capacity of the Ola Gigafactory from 5GWh to 6.4GWh; repayment or pre-payment, in full or in part, of Ola Electric Technologies, its material subsidiary, working capital borrowings; investment in research and product development, including investments in property, plant and equipment and intangible assets; organic growth initiatives; and general corporate purposes.

Analysts and market watchers are keenly looking into the Softbank-backed Ola IPO. A strong response could trigger other companies to launch fundraising through IPOs

‘Consistent growth’

The company’s revenue from operations increased to ₹5,009.8 crore in FY24 from ₹2,630.9 crore in FY23. It recorded a loss of ₹1,584.4 crore compared with ₹1,472 crore in FY23.

Speaking at a press conference ahead of the launch of the IPO, Aggarwal said the company’s growth story is consistent and secular and added that he doesn’t see any slowing down of the EV story. Harish Abichandani, CFO, Ola Electric, said the company’s installed capacity is 1 million for the Future Factory, although infrastructure can support up to 4 million units capacity. Last fiscal capacity utilisation was 49 per cent utilisation.

Aggarwal said the EV two-wheeler maker is currently leading market share in the space. Aggarwal also highlighted that the start-up is aggressively working on its electric motorcycles.

Speaking on the profitability aspect, Aggarwal said the company’s revenue is growing steadily and gross margin had also improved in FY24. However, he did not give any timeline for achieving profitability or even EBITDA breakeven.

“As you grow revenue, you get a lot of operating leverage because your fixed costs don’t scale in line with revenue growth. So, that’s been our story in the last couple of financial years, whereas we have grown volumes and we have invested for a higher volume, as we are growing into that capacity, our margins are improving,” said Aggarwal.

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