Published: 01st Aug 2024
By: Value Research
Image Source: OLA Electric
Enthusiasm for startup IPOs in India tends to be high. Now, Ola Electric IPO is making a lot of noise, but you might want to pass it on given the many pitfalls plaguing the company. Swipe to check them out:
The EV player has been loss-making since its inception & has been burning cash rapidly. The operating cash outflow of Rs 3,025 crore from FY22 to FY24 is nearly 55% of what it is raising from the IPO!
It is heavily reliant on external funds with a history of raising money via VCs and debt. The business, given it is capital intensive with no cash, will remain dependent on outside money.
With 36% of Ola’s cost of material accruing from Chinese imports, given it is the largest lithium supplier, the company’s cost structure is extremely vulnerable.
Compared to competitors that have thousands of retail touchpoints, Ola’s modest network of 870 centres needs significant capital to grow that would further strain its financials.
It’s a walk in the park for giants like Hero Moto & Bajaj Auto to cut into Ola’s market share. This has got to do with their resources. How? Read in detail with the remaining reasons in our full story. Click the link below.