8 reasons why Ola Electric IPO does not deserve your money

Startup IPOs in India have an irresistible charm. History shows investors do not hesitate to pile in. Throw in a hot theme like EV or AI, and voila, everyone wants a piece of the deal. The latest noise-maker on Dalal Street is the Ola Electric IPO. Part of the reason for the buzz is, perhaps, the enticing pricing of the issue which, word has it, had to be tempered from the company's prior expectations. And yet, the magnitude of the IPO begs the question: will this be another fool's gold like the rest of the new-age club, especially when you consider young Ola's nascent growth stage and the unprofitable run? The business model doesn't make it even through a basic eye test. Which is why you may want to rethink riding with Ola Electric. Here are eight reasons why: Also read: Ola Electric IPO 1. It's a cash-burning machine Running unprofitable operations in the name of growing their market share is a standard practice among new-age tech companies and Ola Electric is no exception. It is yet to turn profitable at the operating level. But what's more worrying is its rapid cash burn rate. The company recorded a cumulative operating cash outflow of Rs 3,025 crore between FY22 and FY24, which is almost 55 per cent of the money it is raising from the IPO (fresh issue). This casts serious doubts over the business' sustainability. 2. External funds are a necessary evil Another trait shared by budding startups is their dependence on