Despite a lukewarm response to its Rs 6,146-crore maiden share sale, Ola Electric Mobility jumped 20 per cent during its trading debut on Friday, valuing the country’s largest electric two-wheeler (E2W) maker at Rs 40,218 crore ($4.8 billion).
The Bhavish Aggarwal-led firm’s shares ended at Rs 91.2, up Rs 15.2, or 20 per cent, over its issue price of Rs 76 on the NSE, where Rs 4,426 crore worth of shares were traded.
After opening at Rs 76, the stock hit its 20 per cent upper trading limit with only buyers and no sellers in the counter.
The surge in the SoftBank-backed company’s stock price is an indication that investors are willing to bet on a sustained and long-term shift from petrol two-wheelers to E2Ws in India, the world’s largest market.
Ola’s IPO—the largest in over two years—however, had garnered just 4.3 times subscription, with some investors staying away from the yet-to-turn-profitable E2W maker amid a market selloff this week triggered by US recession fears.
Following the listing of Ola, Aggarwal, who is just 38, has seen his net worth surpass $1.5 billion, cementing his place in the world’s youngest billionaires list.
With sales of about Rs 5,000 crore in FY24, Ola is currently valued at eight times its sales. Listed peers TVS Motor, Eicher Motors, Bajaj Auto, and Hero MotoCorp—predominantly operating in the petrol two-wheeler space—currently trade in the range of 3x to 8x sales, say analysts.
Ola is the largest E2W seller in India by number of units, accounting for 35 per cent of the total E2W registrations in FY24.
Ola is seen as having a head start over its competition if the market shifts towards electric vehicles, labelled as the future of mobility.
According to Redseer, E2W penetration in India is expected to expand from 5.4 per cent of domestic two-wheeler registrations in FY24 to 41-56 per cent of domestic two-wheeler sales volume by FY28. The Indian E2W industry is expected to grow at a compound annual growth rate (CAGR) of 11 per cent to reach a size of $35 billion (Rs 2.8 trillion) to $45 billion (Rs 3.6 trillion) in FY28, the consultancy firm predicts.
Within nine months of delivering its first electric scooter in December 2021, the company became the best-selling E2W brand in India in terms of monthly E2W registrations, as per the VAHAN Portal of the Ministry of Road Transport and Highways.
“We believe that Ola has significant headroom to grow in the coming years, led by favourable market conditions, regulatory norms, and higher capacity utilisation of the Ola Future Factory on a yearly basis. Moreover, they commenced manufacturing the 4,680-form factor cells at the Ola Gigafactory in March 2024, which is expected to allow better control over battery and EV quality, supply, and costs,” said Anand Rathi in a note.
Ola raised Rs 5,500 crore in fresh capital through the IPO. The company plans to use the proceeds to expand capacity at its cell manufacturing plant from 5GWh to 6.4GWh. It will also use the proceeds to repay debt and for research and product development.
Ola Electric manufactures two and three-wheeled EVs along with EV components like battery packs, motors, and vehicle frames. Ola currently has a factory in Bengaluru, and it is in the process of building its EV hub in Krishnagiri and Dharmapuri districts in Tamil Nadu.
First Published: Aug 09 2024 | 6:04 PM IST
