Ola Electric’s Public Offer Opens for Subscription at a Discounted Valuation
Mumbai: Ola Electric, the market leader in the electric two-wheeler segment in India, is set to open its public offer for subscription on Friday with a price band of ₹72-76 per share. This values the company at $4 billion (₹33,522 crore) at the upper end, a significant discount to the $5.4 billion valuation it commanded in its last private funding round in September.
The company, led by Bhavish Aggarwal, is looking to raise ₹6,146 crore through the public offer, with investments focused on making cells and components for electric vehicles. Of this amount, ₹5,500 crore will be raised through the issue of fresh equity, while about ₹646 crore will be through an offer for sale by existing shareholders.
Despite commanding a 35% market share in the electric two-wheeler segment in FY24 with sales of just under 330,000 units, Ola Electric saw its revenues surge by 90% over the previous year to ₹5,010 crore. However, the increase in revenue was accompanied by a rise in losses, which grew by 8% year-on-year to ₹1,584 crore in FY24.
Aggarwal remains optimistic about the company’s future, stating that an increase in sales will help achieve better efficiencies of scale, narrowing its losses. The company’s loss margins have already improved from -43% in FY23 to -20% in FY24.
Experts have found Ola Electric’s ₹33,522-crore valuation reasonable, projecting the company’s potential sales over the next five years and the overall electrification of the automotive market. However, some analysts have noted that the discounted valuation may limit potential upside for investors.
Aggarwal defended the dip in valuation, stating that the company’s focus has always been on the long term. He also clarified that the electric car showcased in August 2022 was not part of Ola Electric’s current plans, emphasizing the company’s focus on its two-wheeler programme and cell manufacturing.
While Ola Electric had previously given timelines for the launch of new products, Aggarwal hinted at new announcements to be made on 15 August this year, in line with the company’s annual tradition. The company’s red herring prospectus indicates that deliveries of the motorcycles will begin in the first half of FY26.
Overall, Ola Electric’s public offer presents investors with an opportunity to be part of the company’s growth story in the electric vehicle ecosystem, albeit at a discounted valuation.