Ola Electric Mobility Limited, a pioneer in India’s electric vehicle (EV) sector, is poised to launch its Initial Public Offering (IPO) on Friday, August 2, 2024. The Bengaluru-based company has set the price band for its shares at Rs 72 to Rs 76 each.
The IPO, which will remain open until Tuesday, August 6, consists of a fresh issue of equity shares worth Rs 5,500 crore and an offer for sale (OFS) of up to 84,941,997 equity shares. Retail investors can bid for a minimum of 195 shares, requiring an investment of at least Rs 14,820.
As the first pure EV company to go public in India, Ola Electric’s IPO has garnered significant attention. The company plans to list its shares on both the BSE and NSE, with 75% of the net offer allocated to qualified institutional buyers, 15% to non-institutional bidders, and 10% to retail individual investors.
Incorporated in 2017, Ola Electric delivered its first scooter in December 2021 and has since introduced seven products to the market. However, the company’s red herring prospectus (RHP) highlights its limited operating history and recent financial losses, including Rs 1,584 crore in FY 2023-24.
“Our Company can experience disruptions in the supply or an increase in prices of components and raw materials, which could result in an increase in the price and impact the delivery timelines,” the RHP read.
The IPO proceeds will partly fund the company’s research and development efforts, with Rs 16,000 million earmarked for this purpose. Ola Electric also noted potential risks, including supply chain disruptions and dependence on government incentives like FAME Phase II subsidies.
“Any reduction or elimination of government incentives such as the Electricity Mobility Promotion Scheme, 2024, Automobile PLI Scheme, Cell PLI Scheme, subsidies from the governments, and GST reimbursement or the ineligibility of any of our electric vehicles for such subsidy would increase the retail price of our electric vehicles and could adversely affect customer demand for our electric vehicles and affect our ability to achieve profitability,” said the RHP.
On risk related to sourcing of raw materials from China, it said the company plans to continue to source raw materials from suppliers in China for the purpose of cell manufacturing.
“We may be exposed to the possibility of product supply disruption and increased costs in the event of changes in the policies, rules, and regulations of the Indian or Chinese government, including as a result of any political tensions, which could result in trade tariffs, increased freight charges or prices of cathode active material and anode active material, or a complete halt on imports from China,” the company of potential risks to the investors ahead of the IPO.
InCred Equities, an equities research and trading services firm, said they are constructive on the Ola IPO. However, quarterly volatility from policy, EV cell plant delay, among others, may limit stock price gains.
(Inputs from ANI)