Ola Electric Mobility Limited, a leading player in India's electric vehicle (EV) sector, is set to launch its Initial Public Offering (IPO), aiming to raise ₹6,145.55 crores. The IPO comprises a Fresh Issue of 72.36 Crore Shares worth ₹5,500.00 Crores and an Offer for Sale of 8.49 Crore Shares totaling ₹645.55 Crores. This highly anticipated event marks a significant step for Ola as it continues its journey towards making India the world's EV hub, fostering innovation through an integrated ecosystem of products, services, and technology.

The subscription period for the Ola IPO opens on August 2, 2024, and closes on August 6, 2024. The shares are expected to be allotted on August 7, 2024, with a tentative listing date on August 9, 2024, on both the BSE and NSE. The IPO price band has been set between ₹72 and ₹76 per equity share, with a minimum lot size of 195 shares. Retail investors can participate with a minimum investment of ₹14,820, while High-Net-Worth Individuals (HNIs) are required to invest in at least 14 lots (2,730 shares), amounting to ₹207,480.

Kotak Mahindra Capital Company Limited, Citigroup Global Markets India Private Limited, BofA Securities India Limited, Goldman Sachs (India) Securities Private Limited, Axis Capital Limited, ICICI Securities Limited, SBI Capital Markets Limited, and BOB Capital Markets Limited are the book-running lead managers for the issue. Link Intime India Private Limited has been appointed as the registrar for the IPO, ensuring smooth processing and management of the application and allotment process.

Ola Electric Mobility has set ambitious objectives for the funds raised from the IPO. The proceeds from the Fresh Issue will be utilized as follows:

₹12,276.41 Million for capital expenditure for the expansion of its subsidiary OCT's cell manufacturing plant from 5 GWh to 6.4 GWh, classified as phase 2 under the expansion plan.

₹8,000.00 Million for the repayment or pre-payment, in full or part, of the indebtedness incurred by its subsidiary OET.

₹16,000.00 Million for investment in research and product development, signaling the company's commitment to advancing EV technology.

₹3,500.00 Million for expenditure related to organic growth initiatives.

General corporate purposes, which may include strategic acquisitions, brand building, and enhancing operational capabilities.

Ola Electric Mobility Limited's Financial Performance

Ola Electric has demonstrated significant growth in revenue, jumping from ₹4,562.60 Million in FY22 to ₹27,826.97 Million in FY23, and further to ₹52,432.70 Million in FY24. However, this impressive revenue growth has been overshadowed by a consistent decline in profitability. The company's EBITDA fell from ₹-7,175.52 Million in FY22 to ₹-11,970.98 Million in FY23, and currently stands at ₹-10,401.91 Million in FY24. Similarly, the Profit After Tax (PAT) has deteriorated from ₹-7,841.50 Million in FY22 to ₹-14,720.79 Million in FY23, with a current PAT of ₹-15,844.00 Million in FY24. These figures highlight a challenging financial trajectory, raising concerns among potential investors.

For the Ola IPO, the company is issuing shares at a pre-issue EPS of ₹-4.35 and a post-issue EPS of ₹-3.59. The pre-issue P/E ratio is -17.47x, while the post-issue P/E ratio is -21.16x, compared to the industry P/E ratio of 41.37x. These metrics suggest that the IPO is fully priced, raising questions about its attractiveness as an investment opportunity.

Grey Market Premium (GMP) and Investor Sentiment

The Grey Market Premium (GMP) for Ola's IPO is currently estimated in the range of ₹7 to ₹10, indicating potential listing gains of 10% to 15%. However, it is important to note that the GMP is an informal indicator and does not guarantee any price discovery or listing performance. The GMP often reflects speculative demand and supply dynamics in the market and should not be relied upon as a definitive investment decision-making tool.

As of 12:30 PM on August 2, 2024, the Ola Electric Mobility Limited IPO live subscription status shows that the IPO has been subscribed 0.10 times on the first day of the subscription period. Investors are encouraged to monitor the live subscription status to gauge market interest and sentiment towards the offering.

The Grey Market Premium (GMP) of Ola indicates potential listing gains of 10% to 15%. Given the company's financial performance and the valuation of the IPO, we recommend Investors to Avoid the Ola Electric Mobility Limited IPO for Listing gain or long term investment purposes.

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