Ola Electric IPO: Public Issue Subscribed 4.27X On The Final Day Of Bidding

Ola Electric’s public issue was oversubscribed 4.27X on the final day of bidding, with the strongest interest received from qualified institutional buyers (QIBs).

The initial public offering (IPO) received bids for 198.79 Cr shares as against 46.51 Cr equity shares on offer. Of these, the QIBs bid for 134.03 Cr shares.

The QIBs were allotted 25.23 Cr shares, and this portion was oversubscribed 5.31X. Among these, foreign institutional investors (FIIs) bid for the maximum number of shares at 82.42 Cr, while mutual funds subscribed to 41.44 Cr shares.

Meanwhile, the retail investors’ portion was subscribed 3.92X. They bid for a total of 33.26 Cr shares against 8.48 Cr shares on offer.

Non-institutional investors (NIIs) bid for 2.4X of the total allotment of 12.72 Cr shares. This portion received bids for 30.5 Cr shares.

The portion reserved for Ola Electric’s employees received 12X bids. The employees bid for 1.01 Cr shares as against 8.46 Lakh shares on offer. 

Ola Electric will become the first automobile manufacturer to list on the Indian bourses in nearly two decades. The company is going public at a valuation of $4 Bn. Its public issue opened for subscription on August 2 and closed today (August 6).

The IPO comprised a fresh issue of shares worth INR 5,500 Cr and an OFS component of 8.49 Cr shares. The company set a price band of 72-76 per equity share for the offering. At the upper end of the price band, the EV manufacturer will raise over INR 6,145.6 Cr in total.

Ola Electric’s net loss widened 7.6% year-on-year (YoY) to INR 1,584.4 Cr in FY24, while operating revenue jumped over 90% YoY to INR 5,009.8 Cr.

While many brokerages recommended investors to ‘subscribe’ for its IPO, a few also raised some concerns.

LKP Securities said in a recent research note, “The vision (of the company) to become a one-stop shop for the EV industry by providing the cutting edge technology, state of the art infrastructure including the battery manufacturing should augur well for the future growth. Having said this, we are cognizant of the fact that the company is running into losses at the operating level itself, though the extent of loss margins are reducing.”

“… based on the narrative of EV proliferation in the country (current EV scooter penetration at 15%), we believe Ola to run the tide being the only pure play 2W EV. Therefore, keeping an eye and a cautious view on the demand and thereby the reduction in losses for Ola, we recommend to subscribe this IPO with a long-term perspective,” analyst Ashwin Patil said.

InCred Equities said that it’s positive on the IPO, however, reasons like policy volatility and penalty risk due to delay in commissioning EV cell plant would limit Ola Electric’s stock price gains.

Meanwhile, it is pertinent to note that the subscription of 4.27X for Ola Electric’s public issue was quite low compared to the response received by startups which went public in recent times. Traveltech major ixigo’s public issue was oversubscribed 98.34X, coworking startup Awfis received 11.4X subscription, while insurtech unicorn Go Digit’s public issue was subscribed 9.6X.