Growth Story Consistent, Potential is Very Large, Says Bhavish Aggarwal Ahead of Ola Electric IPO

India IPO

Updated July 29, 2024

Aggarwal said that he doesn't see any slowing down of the EV story, adding that incumbents are also joining the party.

Growth Story Consistent, Potential is Very Large, Says Bhavish Aggarwal Ahead of Ola Electric IPO

On July 29, Ola Electric CEO Bhavish Aggarwal highlighted the consistent and secular growth of the EV industry, asserting that there is no slowdown in sight. Speaking at a press conference about the upcoming IPO for the EV two-wheeler manufacturer, which opens on August 2, Aggarwal addressed the 14% drop in EV sales in June, attributing it to cyclical factors like subsidy changes and seasonal variations.

Aggarwal noted that Ola Electric's year-on-year EV sales grew by nearly 90% in Fiscal 2024, with market share continuing to rise in the first quarter of Fiscal 2025. He emphasized the significant potential of the EV market, stating that the global transition to electric vehicles is inevitable, though different categories may adopt different strategies.

Ola Electric's Rs 6,146-crore IPO, opening for bids on August 2, includes a fresh issue of Rs 5,500 crore and an offer for sale (OFS) of up to 84.94 million shares, totaling Rs 645.96 crore at the upper price band. The IPO closes on August 6, with the anchor book opening on August 1.

Aggarwal discussed the company's profitability roadmap, noting that significant investments in capacity and distribution channels have led to improved margins. In FY24, revenue grew by 90%, gross margin increased to 16%, and EBITDA margin improved from negative 43% to negative 19%. CFO Harish Abichandani added that Ola's installed capacity at the Future Factory is 1 million units, with infrastructure supporting up to 4 million units.

Aggarwal expects further margin improvements as the company progresses with its cell manufacturing capacities, a critical component of EV costs. Ola Electric has established a capacity of 1.4 GWh for cell manufacturing, with commercial production expected to begin early next year. The company has invested Rs 500 crore for this capacity and secured a Rs 1,900 crore credit line to scale up to 5 GWh.

Aggarwal also commented on the expected downward trajectory of lithium prices, attributing it to technological advancements that continually reduce costs. This reduction benefits the entire EV ecosystem, including Ola's own manufacturing costs.

Looking ahead, Aggarwal announced plans to start sales of electric motorbikes early next year, tapping into a significant market opportunity. He emphasized that both scooters and bikes offer a lower total cost of ownership compared to ICE vehicles, and expressed confidence in Ola's product lineup and market strategy.