Ola Electric IPO

The Ola Electric IPO will open for subscription on August 2, 2024 and close on August 6, 2024. Here's a breakdown of India's largest e-scooter manufacturer's strengths, weaknesses, and growth prospects to help investors make an informed decision. Ola Electric IPO in a nutshell Quality : Ola Electric has remained loss-making both at the net and operating level, with consistent cash outflows since its inception in 2017. Growth : While the company's revenue grew 266 per cent annually between FY22 and FY24 on the back of higher adoption of electric vehicles (EVs), its cumulative loss after tax was Rs 3,841 crore between FY22-24. Valuation : Post the IPO, the company will trade at a P/B ratio of 4.5 times. Overview : The government's EV push will benefit the company, given its market-leading position. Consumer preference is also steadily tilting towards EVs given they provide significant fuel cost savings. This will keep the demand upbeat going forward, further benefiting the company. However, its expansion plans necessitate rapid cash spending, which may continue its loss-making streak. About Ola Electric Ola Electric Mobility is India's largest electric two-wheeler (E2W) manufacturer by number of registered units, which accounted for nearly 35 per cent of the total registrations in FY24. Ola also manufactures core EV components like battery packs, motors and vehicle frames. It has a portfolio of seven EV scooters and is planning to launch four electric motorcycle models by Q2 FY26. Ola Electric's strengths Market leadership: The company commands leadership in the E2W segment with a 35 per cent market share in FY24, as compared to 6 per cent in FY22. Focus on backward integration: The company currently sources cells, which are used in battery packs and form a significant part of an EV's cost, from third-party suppliers. To reduce its reliance on external suppliers and have better control over the supply chain and costs, it is focussing on backward integration by building a gigafactory for cell manufacturing. Ola Electric's weaknesses High competition: The company operates in a highly competitive environment. Other auto giants operating in the E2W market like Bajaj Auto , Hero MotoCorp , and TVS Motor pose a significant threat given they have ample capital to commit towards their EV businesses aggressively with an already established distribution network. Cash generation: The company has high capital requirements to fund its expansion plans and R&D but it has not generated any cash flows since inception. Suggested read: Ceigall India IPO Ola Electric IPO details Total IPO size (Rs cr) 6,146 Offer for sale (Rs cr) 646 Fresh issue (Rs cr) 5,500 Price band (Rs) 72 - 76 Subscription dates August 2, August 5 and August 6, 2024 Purpose of issue To fund capital expenditure, R&D expenses and repay debt Post-IPO M-cap (Rs cr) 33,522 Net worth (Rs cr) 7,519 Promoter holding (%) 36.8 Price/earnings ratio (P/E) - Price/book ratio (P/B)