According to draft papers submitted with market regulator SEBI on Friday, Bhavish Aggarwal's Ola Electric intends to raise Rs 5,500 crore in an initial public offering. This will be India's first IPO by a two-wheeler manufacturer since Bajaj Auto's stock market debut in 2008.
The draft prospectus filed with the Securities and Exchange Board of India states that the sale will comprise an issue of new stock, with CEO Bhavish Aggarwal selling up to 47.4 million shares. As per Reuters, the company was valued at $5.4 billion in a recent funding round and is also supported by Singapore's investment group Temasek.
As per the data from the Society of Manufacturers of Electric Vehicles, Ola Electric has a 32% market share in India's electric two-wheeler industry and competes with TVS Motor, Bajaj Auto, and Ather Energy. According to Tracxn statistics, Ather, which is funded by Singapore's GIC, is likewise planning an India listing and has a market worth of $739.4 million.
The IPO of Ola Electric comes at a time when India has had a record 213 IPOs this year, including those from Tata Technologies and JSW Infrastructure, and benchmark indexes have reached new highs.
For the fiscal year ended March 31, its consolidated deficit increased to Rs 1,472 crore, while revenue from operations increased more than sevenfold. The IPO's lead managers include Kotak Mahindra, Goldman Sachs, and Bank of America.
The issue is being made through the book-building process, with no less than 75% of the issue available for allocation to qualified institutional buyers on a proportionate basis, no more than 15% of the issue available for allocation to non-institutional bidders, and no more than 10% of the issue available for allocation to retail individual bidders.
According to the DRHP, the proceeds of the new issue will be used for capital expenditure to be incurred by the subsidiary, OCT, for the Ola Gigafactory project, repayment or prepayment, in full or in part, of indebtedness incurred by the subsidiary, OET, investment in research and product development, expenditure to be incurred for organic growth initiatives, and general corporate purposes.
SoftBank-backed Ola Electric has cut its sales targets for 2023-2025 by more than half and pushed back its profit aim by a year after decreasing government subsidies drove up e-scooter pricing, according to Reuters earlier this month.
According to a document obtained by Reuters that contains Ola's most recent financial estimates, the company now aims to sell 300,000 e-scooters in the current fiscal year ending March 2024, which is two-thirds lower than the previous goal of 882,000 disclosed by Reuters in July.
As per the internal document, the revenue objective for the current fiscal year period is now $591 million, down from $1.55 billion previously. While Ola is introducing new scooters, parts of its statewide network of over 400 service hubs that maintain and repair its EVs are exhibiting signs of pressure following an increase in sales, according to Reuters.
India's e-scooter sales nearly tripled to over 700,000 in 2022-23 compared to the previous year, with Ola leading the way, but the sales were still a fraction of the country's 15 million plus two-wheeler sales. According to the new paper, Ola will sell 900,000 units in 2024-25 and 2.3 million units in 2025-26. These targets are 60% and 21% lower, respectively, than previous forecasts when incentives were in place.