Published: 01st Aug 2024

Ola Electric IPO: The Good and the Bad

By: Value Research

About the company

Ola Electric is India’s largest electric two-wheeler (E2W) manufacturer, which holds the highest market share of 35% in the E2W industry (as of FY24).

Total IPO size (Rs cr) 6146   Offer for sale (Rs cr) 646   Fresh issue (Rs cr) 5500   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

Ola Electric IPO details

33522   Net worth (Rs cr) 7519   Promoter holding (%) 36.8   Price/earnings ratio (P/E) -   Price/book ratio (P/B) 4.5M-cap (Rs cr)

Post-IPO

Key financials 2Y growth (% pa) FY24 FY23 FY22   Revenue (Rs cr) 266.5 5010 2631 373   EBIT (Rs cr) - -1625 -1420 -849   PAT (Rs cr) - -1584 -1472 -784   Net worth (Rs cr) 2019 2356 3661   Total debt (Rs cr) 2711 1704 804

Financial history

PAT is profit after tax EBIT is earnings before interest and tax

3Y average (%) FY24 FY23 FY22   ROE (%) -54.1 -78.5 -62.5 -21.4   ROCE (%) -28.4 -31.7 -29.8 -23.7   EBIT margin (%) -104.6 -32.4 -54 -227.5   Debt-to-equity 0.7 1.3 0.7 0.2Ratios

Key ratios

ROE is return on equity ROCE is return on capital employed

The Good

With a strong brand recall and market leadership, Ola Electric stands to benefit from the growing consumer preference and demand for electric two-wheelers.

The Good

Its gigafactory, once fully constructed, will help the company reduce its reliance on external suppliers for sourcing battery pack cells, which form a crucial cost component in an EV.

The Bad

The company has never had any profits or cash flows since its inception. Can it breakeven? Our full analysis has all the details. Check it from the link below.

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