IPO-Bound Ola Electric’s FY24 Net Loss Widens To INR 1,584 Cr, Revenue Jumps 90%

IPO-bound electric mobility startup Ola Electric’s net loss widened 7.6% to INR 1,584.4 Cr in the financial year 2023-24 (FY24) from INR 1,472.1 Cr in the previous year, even as the startup’s top line continued to surge.

On the back of a robust growth in its vehicle sales, Ola Electric’s operating revenue jumped over 90% to INR 5,009.8 Cr during the year under review from INR 2,630.9 Cr in FY23, as per the company’s red herring prospectus (RHP) filed on July 26.

As an electric two-wheeler manufacturer, the Bhavish Aggarwal-led startup currently earns all its revenue from sales of its escooters. Its Ola S1 Pro model is currently bringing in the highest amount of revenue.

Meanwhile, the startup also highlighted in its RHP, “In Fiscal 2024, our revenue from the sale of EV scooters was primarily dependent on the sale of Ola S1 Pro scooter models. We cannot assure you that our future revenue from the sale of EV scooters will be more evenly spread across our other EV scooter models.”

Ola S1 Pro, its premium category scooter, contributed almost 60% to the total revenue. Ola S1 Air generated 18.93% of the income, while sales of Ola S1 generated only 2.68% in revenue in FY24 as against 29.36% in the previous year.

Despite the public market’s inhibition towards loss-making entities, Ola Electric is set to go public with heavy cash burn and no clarity on its path to profitability. In its RHP, the company noted the following points as part of its forward-looking statement: 

• We have a limited operating history and there is no assurance we will be cost effective and profitable.
• We heavily invest in and plan to continue investing in research and development. There is no assurance that we will realise returns on such investments.
• If our vehicles become ineligible for the EMPS (Electric Mobility Promotion Scheme) 2024 subsidy, we may become less competitive due to higher product pricing (without the subsidies), potentially impacting our business and financial performance.
• We intend to utilise INR 1,600 Cr out of the net proceeds for investment into research and development purposes although there is no assurance that such investment will proceed as planned and result in creation of tangible assets.

Ola Electric sold 3.29 Lakh vehicles in FY24 as against 1.56 Lakh units in the previous fiscal year.

It is pertinent to note that Ola Electric filed its draft red herring prospectus (DRHP) with the SEBI in December last year and got approval to launch the IPO from the market regulator in June this year. 

Initially, the public issue comprised a fresh issue of shares worth INR 5,500 Cr and an offer for sale (OFS) component of up to 9.51 Cr shares. As per its RHP, the OFS component is lowered to 8.49 Cr shares, while the size of the fresh issue remains unchanged.

Zooming Into Expenses

In line with its business growth, Ola Electric’s total expenses shot up over 60% to INR 6,277.4 Cr in FY24 from INR 3,883.4 Cr in the previous year, with cost of materials consumed contributing 69.95% to the overall cost.

Cost Of Materials Consumed: Ola Electric’s spending in this bucket jumped over 75% to INR 4,390.9 Cr during the year under review from INR 2,504.8 Cr in FY23.

It is pertinent to note that while the startup manufactures certain EV components, it imports battery cells from two foreign cell manufacturing companies, and plastic parts, electronic child parts and metal parts from other domestic and foreign suppliers. 

As per the RHP, imported supplies comprised 37.03% (a majority of it from China) of the cost of materials consumed in FY24 as against 31.11% in FY23. Meanwhile, domestic supplies comprised 62.97% of the cost of materials consumed in FY24 as compared to 68.89% the previous year.

Employee Cost: Ola Electric spent INR 438.9 Cr towards employee benefits expenses in FY24, registering a mere 2.8% increase year-on-year (YoY).

In that, it spent INR 295.4 Cr on salaries, wages and bonuses, while INR 88.7 Cr was spent as equity settled share-based expenses.

Inventories: The EV makers’s losses in inventories of finished goods, stock-in trade and work-in-progress increased to INR 81.1 Cr in the reported year from INR 73.6 Cr a year ago.

Warranties: The warranty expenses for its electric two-wheelers jumped almost 154% YoY to INR 293.3 Cr in FY24.

Vehicle Repair Services: Interestingly, Ola Electric’s spending towards vehicle repair services fell over 54% YoY to INR 37.6 Cr in the year under review.

Ola Electric’s public issue will open for retail subscription on August 2 and close on August 6.

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