Ola Electric Announces IPO Price Band of ₹72-76 Per Share
Ola Electric Mobility Ltd., a leading Indian electric two-wheeler manufacturer, has announced the price band for its highly anticipated initial public offering (IPO). The company has set the price range at ₹72-76 per equity share, with a face value of ₹10 each. The IPO, which is set to open on August 2 and close on August 6, 2024, aims to raise up to ₹6,145.56 crore from the capital market.
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The IPO consists of a fresh issue of shares worth ₹5,500 crore and an offer for sale (OFS) of 8,49,41,997 equity shares by promoter selling shareholders and investor selling shareholders, amounting to ₹645.56 crore at the upper price band. Investors can bid for a minimum of 197 shares and in multiples of 197 shares thereafter.
| Key Details of Ola Electric IPO | |
|---|---|
| Price Band | ₹72-76 per equity share |
| Face Value | ₹10 per share |
| IPO Size | Up to ₹6,145.56 crore |
| Fresh Issue | Up to ₹5,500 crore |
| Offer for Sale (OFS) | Up to 8,49,41,997 equity shares (₹645.56 crore at upper price band) |
| Minimum Bid Quantity | 197 shares |
| Bid Multiples | 197 shares |
| IPO Open Date | August 2, 2024 |
| IPO Close Date | August 6, 2024 |
Ola Electric, founded by Bhavish Aggarwal, has quickly become a dominant player in the Indian electric two-wheeler market. The company currently holds a strong leadership position, with a market share of nearly 39%. Aggarwal, who serves as the Chairman and Managing Director of Ola Electric, stated during the IPO announcement that the company has focused its attention on the EV space and boasts a portfolio of 7 scooters, with plans to introduce 4 motorcycles in the near future.
The company’s vertically integrated model encompasses R&D, technology, manufacturing, supply chain, sales, service, and charging facilities. Ola Electric is in the process of building its EV hub in the Krishnagiri and Dharmapuri districts of Tamil Nadu, for which the state government has allocated 2,000 acres of land.
Utilization of IPO Proceeds.
Ola Electric plans to utilize the proceeds from the fresh issue in the following manner:
- Approximately ₹1,228 crore will be used for capital expenditure incurred by the subsidiary, Ola Cell Technologies (OCT).
- ₹800 crore will be allocated for the repayment or pre-payment, in full or part, of the indebtedness incurred by OCT.
- ₹1,600 crore will be invested in research and product development.
- ₹350 crore will be used for expenditure related to organic growth initiatives and general corporate purposes.
Valuation and Investor Gains.
At the upper end of the price band, Ola Electric’s market capitalization will be around $4 billion, which is a 25.8% decrease from its $5.4 billion valuation in September 2023. The lower IPO valuation is attributed to a global tech valuation correction and Ola’s strategy to boost participation.
Bhavish Aggarwal, the firm’s promoter, holds 1.36 billion shares (36.94% stake), valued at ₹10,350 crore based on the upper end of the price band. Aggarwal acquired this stake for a negligible amount, as per the Draft Red Herring Prospectus (DRHP).
While early investors may experience a loss of about 30%, pre-IPO state investors such as SoftBank, the single largest external shareholder, along with Tiger Global and Matrix Partners, are set to gain significantly from the IPO.
Capacity Utilization and Growth Potential.
Despite having an installed capacity of 1 million units and the infrastructure to support up to 4 million units per annum, Ola Electric’s average capacity utilization in FY24 was only 49%, according to Harish Abichandani, the company’s Chief Financial Officer.
However, Aggarwal remains optimistic about the growth potential of the EV sector, stating that there doesn’t seem to be any slowdown in the EV story and that incumbents are joining the party. He emphasized that EVs represent the biggest transformation in the automotive industry in a century.
Legal Trouble with MapMyIndia.
In a recent development, Ola Electric has found itself in legal trouble with CE Info System, the parent company of MapMyIndia. MapMyIndia has alleged that Ola Electric has copied data from them for its own mapping service, Ola Maps. The two firms had formed a licensing agreement in 2022 that allowed Ola Electric to use MapMyIndia’s navigation services for its S1 Pro electric scooter.
The agreement prohibited Ola from integrating the licensed product with similar competing products and from reverse engineering or attempting to extract or replicate the source code from any API or related software of the licensed product.
Frequently Asked Questions (FAQ).
What is the price band for Ola Electric’s IPO?
The price band for Ola Electric’s IPO is set at ₹72-76 per equity share, with a face value of ₹10 each.
When will Ola Electric’s IPO open and close?
Ola Electric’s IPO will open on August 2, 2024, and close on August 6, 2024.
What is the size of Ola Electric’s IPO?
Ola Electric’s IPO aims to raise up to ₹6,145.56 crore from the capital market. It consists of a fresh issue of shares worth ₹5,500 crore and an offer for sale (OFS) of 8,49,41,997 equity shares, amounting to ₹645.56 crore at the upper price band.
What is the minimum bid quantity for Ola Electric’s IPO?
Investors can bid for a minimum of 197 shares and in multiples of 197 shares thereafter.
How does Ola Electric plan to utilize the IPO proceeds?
Ola Electric plans to use the IPO proceeds for capital expenditure, repayment of indebtedness, investment in research and product development, and expenditure related to organic growth initiatives and general corporate purposes.
What is Ola Electric’s current market share in the Indian electric two-wheeler market?
Ola Electric currently holds a strong leadership position in the Indian electric two-wheeler market, with a market share of nearly 39%.
What is the valuation of Ola Electric based on the IPO price band?
At the upper end of the price band, Ola Electric’s market capitalization will be around $4 billion, which is a 25.8% decrease from its $5.4 billion valuation in September 2023.
Who are the major investors in Ola Electric?
SoftBank is the single largest external shareholder in Ola Electric, along with other pre-IPO state investors such as Tiger Global and Matrix Partners.
What is the legal issue between Ola Electric and MapMyIndia?
MapMyIndia has alleged that Ola Electric has copied data from them for its own mapping service, Ola Maps, violating a licensing agreement formed between the two firms in 2022.
What is Bhavish Aggarwal’s stake in Ola Electric?
Bhavish Aggarwal, the firm’s promoter, holds 1.36 billion shares (36.94% stake), valued at ₹10,350 crore based on the upper end of the price band. Aggarwal acquired this stake for a negligible amount, as per the Draft Red Herring Prospectus (DRHP).
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with a financial advisor before making any investment decisions.
C.K. Gupta
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