Electric 2W player Ola Electric sets IPO price band at Rs 72-76 per share

Ola Electric, India's leading electric two-wheeler company, is launching the largest IPO of the year, aiming to raise Rs 6,146 crore ($734 million).

This year, around 150 companies in India have gone public, raising a total of $5 billion, double the amount from last year. Backed by Softbank, Ola has set its IPO price band at Rs 72-76 per share. At the top end, the company will be valued at Rs 33,522 crore ($4 billion) post-dilution. The IPO opens on August 2.

CEO Bhavish Aggarwal, aiming for profitability, stated that volume growth and vertical integration will be key to improving margins. The IPO will issue fresh shares worth Rs 5,500 crore to repay debt, expand the gigafactory, and fund research and development. The OFS portion is Rs 646 crore, with Aggarwal selling shares worth Rs 288 crore. Other sellers include Tiger Global and Softbank. Post-IPO, promoter shareholding will drop from 45% to 36.78%. Strong interest is expected from domestic and foreign mutual funds.

Aggarwal noted that the EV market in India is still in its early days and is expected to expand. Despite occasional sales drops and industry slowdowns, he believes the EV market will grow. Ola Electric's gross margins improved from 5.4% in FY22 to 16.47% in FY24, with volumes increasing from 156,000 units in FY23 to 330,000 units in FY24.

Ola Electric sources cells from third-party suppliers but has started trial runs at its gigafactory in Tamil Nadu. The gigafactory, with a planned capacity of 20 GwH, will support existing and future products. The company is also part of the Cell PLI scheme and has received certification for its S1 Pro product.

Ola’s 2000-acre EV hub in Tamil Nadu aims to improve efficiency. Aggarwal announced that motorcycle deliveries will start early next year, with more models to be unveiled on August 15. As India aims to increase its two-wheeler exports, Aggarwal is optimistic about Ola Electric's future.

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