Ola Electric Mobility Ltd. continues to capture investor attention as its share price soared for the second consecutive session, hitting the 20% upper circuit on Monday. The stock opened at ₹97.21 per share on the BSE and quickly climbed to an intraday high of ₹109.41, while dipping briefly to a low of ₹95.28 per share. This strong performance follows Friday’s session, where the share price also hit the upper circuit, reflecting robust investor demand and growing confidence in the company’s future prospects.

Stock Performance Overview

On Monday, the Ola Electric share price crossed the ₹100 mark, a significant milestone for the company. This is a continuation of the positive momentum seen on Friday, when the stock also reached the upper circuit, closing at ₹91.20—a 20% gain over its ₹76 IPO price. The stock debuted on Friday at ₹75.99, slightly below the issue price, but quickly recovered to end the day with substantial gains.

Factors Driving the Rally

The surge in Ola Electric's share price can be attributed to several factors:

High Investor Demand: The nation’s expanding adoption of electric vehicles (EVs) has driven significant interest in Ola Electric, the largest e-scooter manufacturer in India. Investors are optimistic about the company’s growth potential in the rapidly evolving EV market.

Strong IPO Subscription: The company’s ₹6,145-crore IPO saw strong demand, with subscriptions 4.27 times higher than the shares on offer. The IPO included an offer for sale (OFS) of up to 8,49,41,997 equity shares and a fresh issue of up to ₹5,500 crore.

Long-Term Growth Prospects: Despite a lukewarm debut, market analysts like Prashanth Tapse, Senior Vice President of Research at Mehta Equities, have recommended holding onto the stock for the long term, citing Ola Electric's strong growth story. The company is set to launch its highly anticipated Ola Electric Bike on August 15, which is expected to further boost investor sentiment.

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Use of IPO Proceeds

Ola Electric Mobility Ltd. has outlined a strategic plan for the utilization of the ₹5,500-crore raised from its IPO. The company intends to allocate:

₹1,227.6 crore to expand its cell manufacturing facility capacity from 5 GWh to 6.4 GWh.

₹1,600 crore for product development and research.

₹800 crore for debt repayment.

₹350 crore for organic growth efforts.

Additionally, the company's Red Herring Prospectus (RHP) details plans for funding Phases 1(a) and 1(b) of the establishment and expansion of the Ola Gigafactory in the Krishnagiri district of Tamil Nadu. These phases will be financed through internal accruals and long-term borrowings made available by its subsidiary, Ola Cell Technologies Pvt Ltd (OCT).

Upcoming Financial Results

Investors are also eagerly awaiting the unaudited standalone and consolidated financial results for the quarter ended June 30, 2024, which are scheduled to be considered and approved at a board meeting on August 14, 2024. This could provide further insights into the company’s financial health and future outlook.

Conclusion

The Ola Electric share price has shown remarkable resilience and growth since its debut, driven by strong investor demand and optimism about the company’s role in the expanding EV market in India. With strategic plans in place for growth and expansion, the stock is poised for long-term gains, making it an attractive option for investors with a higher risk appetite and a longer investment horizon.

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