Ola Electric Mobility Limited’s much-anticipated initial public offering (IPO) opens for subscription on Friday, generating significant interest as it aims to raise Rs 6,145.56 crore, marking it as the largest IPO of the year.
Founded in 2017 by Bhavish Aggarwal, Ola Electric focuses on manufacturing electric vehicles and essential components, such as battery packs, motors, and vehicle frames, at its Ola Futurefactory.
Brokerage Opinions
LKP Securities: They highlight upcoming new launches and EV bike releases next year, which should help Ola Electric maintain its market share, currently at 45 per cent. They believe higher volumes will lead to operating leverage, reducing losses in the mid-term. They recommend subscribing to the IPO with a long-term perspective, citing the potential reduction in battery costs and the overall growth of the EV sector in Bharat.
Master Capital Services Ltd: This IPO includes a fresh issue of shares worth Rs 5,500 crore, with proceeds allocated to expanding the Ola Gigafactory’s cell manufacturing capacity, debt repayment, R&D, organic business expansion, and general purposes. They note Ola Electric’s significant market share increase in FY24 and encourage investors to review the company’s prospectus and financial statements before making any decisions.
SBI Securities: While noting Ola Electric’s high growth phase with impressive volume and revenue growth, they caution that the company has yet to report profits at the EBITDA and PAT levels due to substantial capital expenditure. They value the company at 6.7x FY24 P/S at the upper price band on post-issue capital.
Axis Capital Limited: They highlight Ola Electric’s strong market position and integrated approach, along with its focus on technology and R&D. They note that disruptor OEMs globally have succeeded in the EV market due to innovation, and similar trends are seen in India.
Ashika Stock Broking Limited: They mention that Ola Electric is the only EV manufacturer in Bharat benefiting from two PLI schemes (Automobile PLI Scheme and Cell PLI Scheme). These schemes provide cash incentives for the advanced chemistry cells and EVs it manufactures and sells.
HDFC Securities Ltd: They caution about Ola Electric’s limited operating history and ongoing losses. The company has heavily invested in R&D with no assurance of returns. Investors should consider these risks when evaluating the IPO.
In summary, while brokerages recognise the growth potential and strategic advantages of Ola Electric, they also advise caution due to the company’s current lack of profitability and the high investment phase. Investors are encouraged to review all available information before deciding whether to subscribe to the IPO.
