Ola Electric IPO: Key Details, Risks, and Insights from the RHP to Know Before Investing in the Rs.6,146 Crore Issue

The Ola Electric IPO is scheduled to debut on D-Street this week, with trading set to start on Friday, August 2. The IPO will be available at a price band between Rs.72 and Rs.76 and will close on Tuesday, August 6.

Mr. Bhavish Aggarwal, Chairman and Managing Director of Ola Electric Mobility Limited, addressed the IPO announcement event held in Mumbai.

Ola Electric IPO: The highly anticipated initial public offering of Ola Electric Mobility Ltd is set to launch on D-Street this week, with trading beginning on Friday, August 2. The IPO will be offered within a price band of Rs.72 to Rs.76 and will close on Tuesday, August 6.

The offering includes a sale of up to 84.94 million shares and a new issue totalling Rs.5,500 crore. The offer for sale (OFS) portion is valued at Rs.645.96 crore at the highest price range, making the total issuance size Rs.6,145.96 crore. The company's market capitalization is projected to be around Rs.33,500 crore.

The OFS will feature the sale of 3.79 crore equity shares by Bhavish Aggarwal and 41.79 lakh shares by Indus Trust. Additionally, SVF II Ostrich (DE) LLC, the company's largest shareholder with a 21.98% stake (or 8.1 crore shares), will sell 2.38 crore shares through the OFS following the conversion of CCPS.  

The company plans to use the net proceeds from the IPO for several key purposes: investing in research and product development, reducing debt of its subsidiary OET, supporting organic growth initiatives, and covering general corporate expenses. Additionally, OCT, another subsidiary, will use the funds to expand its cell manufacturing plant's capacity from 5GWh to 6.4GWh, as part of phase 2 of its expansion plan.

For the Ola Electric IPO, at least 75% of the shares in the public offering are reserved for Qualified Institutional Buyers (QIBs), up to 15% for Non-Institutional Investors (NIIs), and up to 10% for retail investors.  

The basis for share allocation in the Ola Electric IPO is anticipated to be finalized on Wednesday, August 7. Refunds will start on Thursday, August 8, with shares being credited to the allottees' demat accounts on the same day. Ola Electric's shares are expected to be listed on the BSE and NSE on Friday, August 9.   

The book running lead managers for the Ola Electric IPO include Kotak Mahindra Capital Company Ltd, Bofa Securities India Ltd, Axis Capital Ltd, SBI Capital Markets Ltd, Citigroup Global Markets India Private Ltd, Goldman Sachs (India) Securities Private Ltd, ICICI Securities Ltd, and Bob Capital Markets Ltd. The registrar for the issue is Link Intime India Private Ltd.

Here are 10 important details from the Red Herring Prospectus (RHP) that investors should consider before subscribing to the IPO.   

Ola Electric IPO: Key Promoters and Shareholders  

The company's promoter, Bhavish Aggarwal, holds 1,361,875,240 equity shares with a face value of Rs.10 each, representing a 36.94% ownership of the company's total issued, subscribed, and paid-up equity share capital.

Ola Electric IPO: Industry Peers. 

The company's listed peers include TVS Motors, with a P/E ratio of 68.99; Eicher Motors, with a P/E ratio of 33.58; Bajaj Auto, with a P/E ratio of 34.02; and Hero MotoCorp, with a P/E ratio of 28.89.

Ola Electric Mobility Operations 

The company, a dedicated electric vehicle (EV) manufacturer in India, specializes in producing EVs and their components with vertically integrated technology and production capabilities. At the Ola Futurefactory, they produce both EVs and key EV components. Besides launching four new products, they have already delivered seven. They operate a comprehensive, direct-to-customer distribution network across India, which includes 431 service centers and 870 experience centers as of March 31, 2024.

Ola Electric Mobility Group Affiliates 

The Indian group companies include OLA Financial Services Private Ltd, Ola Fleet Technologies Private Ltd, Ola Stores Technologies Private Ltd, Pisces eServices Private Ltd, ANI Technologies Private Ltd, Geospoc Geospatial Services Private Ltd, and Krutrim SI Designs Private Ltd. Ola USA Inc. is the international group company.

Ola Electric Mobility Sector 

According to the Redseer Report, electric two-wheelers (E2Ws) are driving the electrification of transportation in India due to their favorable total cost of ownership and the production-linked incentives and subsidies provided by the Indian government to support domestic EV manufacturing and adoption.

The E2W sector in India is expected to grow at a CAGR of 11%, reaching a market size of between US$35 billion (Rs.2.8 trillion) and US$45 billion (Rs.3.6 trillion) by Fiscal 2028. E2W penetration in India is projected to rise from approximately 5.4% of domestic two-wheeler registrations in Fiscal 2024 to 41-56% of domestic two-wheeler sales volume by Fiscal 2028. Additionally, regions such as Southeast Asia, Latin America, and Africa present significant export opportunities for Indian E2W manufacturers.

Ola Electric Mobility Production Facility 

The company’s EV hub in Tamil Nadu, India, includes the Ola Futurefactory for electric vehicle production, the Ola Gigafactory for cell manufacturing, and various co-located suppliers.

In addition to developing this new hub in the Tamil Nadu districts of Krishnagiri and Dharmapuri, Ola already operates a Futurefactory, Gigafactory, and Battery Innovation Center in Bengaluru.

Ola Electric Mobility Offerings  

The Ola S1 scooter range—including the Ola S1 Pro, Ola S1 Air, Ola S1 X+, Ola S1 X (2 kWh), and Ola S1 X (3 kWh)—is designed using the Generation 2 platform for EV scooters. For its newly introduced motorcycle line, which features the Diamondhead, Adventure, Roadster, and Cruiser models, Ola plans to use a similar platform approach.

Lock-up Period for Equity Shares Granted to Anchor Investors

A 90-day lock-up period applies to 50% of the equity shares allocated to anchor investors, while the remaining 50% of the shares will be subject to a 30-day lock-up period.