A Lackluster Debut
Ola Electric Mobility, led by Bhavish Aggarwal, made a lackluster debut on the stock exchanges despite positive market sentiments. The shares listed flat at Rs 75.99 on the BSE and Rs 76 on the NSE, against the issue price of Rs 76. However, post-listing, Ola Electric shares rallied 17.77 per cent to Rs 89.50 on the BSE.
This flat listing performance, coupled with a mere 4.45 times subscription, underscores the challenges the company faces in gaining investor confidence. While Ola Electric's vision for the EV market is ambitious, its current financial performance, marked by consistent losses, and the highly competitive landscape have tempered investor enthusiasm.
Analysts suggest that investors exit and book a minor profit, or hold their position with a stop loss below Rs 70. However, those with a high-risk appetite can consider accumulating on dips for a 2-3 year journey.
Ola Electric's IPO received a decent response from investors amidst ongoing market volatility, getting subscribed 4.45 times. The company offered a fresh issue of 723,684,210 equity shares and an offer for sale, with the promoters and investors offloading 84,941,997 shares.
The proceeds from the IPO will be used to repay debt, expand its gigafactory, fund organic growth initiatives, and support research and product development. The remaining proceeds will be allocated for general corporate purposes.
Ola Electric is building vertically integrated technology and manufacturing capabilities for EVs and EV components, including cells. The company commands nearly a 35 per cent market share in India's electric two-wheeler market in FY24.
However, the negative grey market sentiment prior to listing reflected concerns about the company's path to profitability and its ability to navigate the complexities of the EV market effectively. The flat listing highlights the need for Ola Electric to address these concerns and demonstrate a clear path to success.