Ola Electric’s IPO: Key Details and Risks Explained
The much-awaited initial public offering (IPO) of Ola Electric Mobility was subscribed 0.38 times at the end of Day 1. The portion reserved for retail investors was subscribed 1.7 times. The public issue of Ola opened today and will continue till Tuesday.
Ola Electric, based in Bengaluru, India, is a pure electric vehicle company. The company has set the price band for its IPO at Rs 72 to Rs 76 per share. Investors can bid for a minimum of 195 equity shares and in multiples of 195 shares thereafter. The minimum amount required by a retail investor to bid for the IPO is Rs 14,820.
The IPO consists of a fresh issue of equity shares aggregating up to Rs 55,000 million (or Rs 5,500 crore) and an offer for sale (OFS) of up to 84,941,997 equity shares. The shares are proposed to be listed on both BSE and NSE. The offer is being made through the Book Building Process, with allocations for qualified institutional buyers, non-institutional bidders, and retail individual bidders.
Ola Electric, founded by Bhavish Aggarwal, is the first pure EV company in India to hit the stock markets. The company has been loss-making, with losses of Rs 1,584 crore in 2023-24, Rs 1,472 crore in 2022-23, and Rs 784 crore in 2021-22.
Incorporated in 2017, Ola Electric delivered its first electric vehicle scooter in December 2021. The company has since delivered several models, including the Ola S1 Pro, Ola S1, Ola S1 Air, and various versions of the Ola S1 X.
The company plans to use Rs 16,000 million from the net proceeds for research and development. However, it faces risks related to supply chain disruptions, government incentives, and raw material sourcing from China. The company benefits from government incentives like FAME Phase II subsidies and GST reimbursements, but any reduction in these incentives could impact profitability.
Ola Electric sources some raw materials from China, which poses risks due to potential policy changes and political tensions. These could result in increased costs or supply disruptions.
Bhavish Aggarwal is the Founder, Chairman, and Managing Director of Ola Electric.
Doubts Revealed
Ola Electric -: Ola Electric is a company in India that makes electric scooters and other electric vehicles. It is part of the larger company Ola, which is known for its ride-hailing services.
IPO -: IPO stands for Initial Public Offering. It is when a company sells its shares to the public for the first time to raise money.
subscribed 0.38 times -: This means that on the first day, people wanted to buy only 38% of the total shares available. It shows how much interest there is in buying the shares.
retail investors -: Retail investors are regular people who buy shares, not big companies or professional investors.
Rs 72 and Rs 76 -: Rs stands for Rupees, which is the currency of India. The shares are being sold for between 72 and 76 Rupees each.
minimum of 195 shares -: To buy shares in this IPO, you have to buy at least 195 shares at once. You can’t buy just one or two shares.
Bhavish Aggarwal -: Bhavish Aggarwal is the person who started Ola Electric. He is an entrepreneur from India.
supply chain -: The supply chain is the system of getting parts and materials to make the products. If there are problems in the supply chain, it can delay production.
government incentives -: Government incentives are benefits or support given by the government to encourage companies to do certain things, like making electric vehicles.
raw material sourcing from China -: This means getting the basic materials needed to make the products from China. If there are issues with getting these materials, it can affect production.
research and development -: Research and development (R&D) is the work done to create new products or improve existing ones. The money from the IPO will help Ola Electric do more R&D.
