Subscription status for Ola Electric Mobility IPO: On the second day of the auction, Ola Electric Mobility IPO was completely subscribed. At 8.98 times, the employee section had the highest subscription rate. The qualified institutional buyer (QIB) portion was subscribed to 40%, while the retail component and non-institutional investors portion were subscribed 2.87 times and 1.11 times, respectively.
In the first share sale, 46,51,59,451 shares were offered, while bids were received for 49,43,63,610 shares, according to BSE data. This equals a subscription that is 1.06 times larger.
A poor level of investor interest was indicated by the fact that only 35% of Ola Electric Mobility’s ₹6,145 crore initial share offer was subscribed on Friday, August 2, the opening day of the bidding process.
The offering’s price range is set at between ₹72 and ₹76 for each equity share with a face value of ₹10. Before the initial public offering (IPO) subscription period opened on Friday, August 2 and ended today, Tuesday, August 6, the anchor investors gave the business ₹2,763 crore.
10% of the shares in the Ola Electric initial public offering (IPO) are designated for retail investors, 15% for non-institutional institutional investors (NII), and 75% of the shares for qualified institutional buyers (QIB).
Electric vehicles (EVs) and certain necessary EV components, such as motors, battery packs, and vehicle chassis, are produced by Ola Electric. Its business plan is to take advantage of the fact that India is electrifying its transportation system and sell its EVs to a few other nations later on. In December 2021, it began shipping the Ola S1 Pro, its first electric car. Following that came the arrival of the Ola S1 Air, Ola S1 X+, and Ola S1 S1 September 2022.
Evaluation of Ola Electric’s IPO
LKP Securities
According to the brokerage, the company was awarded Production Linked Incentive (PLI) for both its battery production facility and some of its best-selling models. This will assist Ola in growing their profitability in the upcoming years. A slew of new product releases coupled with the introduction of EV bikes the following year should help the company maintain its market share (which was 39% at the end of Q4 and 45% at the end of Q1). Higher volumes, they think, will lead to operating leverage and a decrease in losses in the medium run. Decreased battery costs should also help the cause.
Based on the national story of EV proliferation, they think Ola will lead the way as the first pure play 2W EV (current EV scooter adoption is at 15%). In light of this, the brokerage urges investors to SUBSCRIBE to this IPO while keeping a careful and attentive eye on demand and, as a result, the reduction of Ola’s losses.
Choice Equity Broking Pvt Ltd
The brokerage claims that Ola Electric’s high capital expenditures in its early years and the massive capital outlay it has planned for the medium future indicate the company’s aggressive expansion aspirations. Given the company’s ongoing dominance in the E2W market, the benefits of backward initiatives such cell production, and its broad use in energy storage applications, we believe the asking price is reasonable.
The company’s loss-making activities and reliance on government subsidies to boost sales are its main causes for concern. Operating leverage would not activate in the event that the current EMPS scheme is not renewed until September 2024, preserving the profitability gap. Thus, we provide a “Subscribe with Caution” rating to the issue.
Details of Ola Electric’s IPO
The Ola Electric IPO includes an offer for sale (OFS) of 8.49 crore equity shares by investors and promoters, in addition to a new issue of equity shares up to ₹5,500 crore. Bhavish Aggarwal, the founder of Ola Electric, will sell about 3.8 crore shares under the OFS.
Also Read | Ola Electric’s IPO is 28% subscribed on Day 1, with the retail portion fully booked
The company intends to conduct research and product development, support spending for organic growth initiatives, pay off debt amassed by its subsidiary, OET, and use the remaining net proceeds for general corporate purposes. Phase 2 of the expansion plan calls for its subsidiary OCT to invest capital funds to raise the plant’s capacity from 5 GWh to 6.4 GWh.
Ola Electric’s current IPO GMP
The current grey market premium, or GMP, for Ola Electric Mobility’s IPO, is +2.50. According to investorgain.com, this shows that the price of Ola Electric shares was selling at a premium of ₹2.50 on the black market.
The anticipated listing price for Ola Electric shares, accounting for the upper end of the IPO pricing band and the existing premium on the grey market, was ₹78.5 per share, 3.29% more than the IPO price of ₹76.
A “grey market premium” indicates that investors are willing to give up more capital than the issue price.
(Disclaimer: The opinions and suggestions mentioned are from individual analysts, experts, and broking firms, not endorsed by Businessuncover. Investors should consult certified experts before deciding on investments.)
