Bhavish Aggarwal: Ola Electric Is Almost Equal To Maruti Suzuki
The country’s largest electric scooter manufacturer, Ola Electric, is gearing up for its much-anticipated initial public offering (IPO). Recently, during an interview, CEO Bhavish Aggarwal made a bold claim about the company’s standing in the electric vehicle (EV) market. According to Aggarwal, Ola Electric has positioned itself almost on par with automotive giant Maruti Suzuki. As we all know, Maruti Suzuki currently dominates the car manufacturing industry in India. Many believe that this is a bold claim.
Bhavish Aggarwal’s Bold Statement
In a recent press conference, Bhavish Aggarwal stated that Ola Electric’s market position in the EV space is comparable to Maruti Suzuki’s. He highlighted that Ola Electric holds a substantial 39% market share in the Indian EV market as of the first quarter of FY25.
During the interview, Ola Electric CEO Aggarwal attributed this success to the company’s aggressive and rapid scaling strategy. He added that it has allowed it to outpace many competitors. The closest rivals to Ola Electric currently are Ather Energy and TVS.
Aggarwal, in the press conference, also highlighted the significant transformation EVs represent in the automotive industry. He called it the most substantial change in the past century. He added that Ola Electric’s mission-driven approach aims to establish India as a global hub for electric vehicles.
All You Need to Know About Ola Electric’s IPO
As stated above, Ola Electric is coming up with an IPO. Ola Electric’s IPO is expected to attract major investor interest, with domestic investors like SBI AMC, HDFC AMC, Nippon Life India AMC, and UTI AMC. All of these investors will be bidding for approximately $200 million each.
Apart from these domestic investors, international investors such as Fidelity, Nomura, and Norway’s Norges Bank are also expected to participate. Reportedly, their bidding will be in the range of $75-100 million each in the IPO anchor book.
Ola Electric’s IPO comes with a valuation of about $4 billion. It is down 25% from its last private funding round, which valued the company at $5.4 billion in September last year. This lower valuation is seen as a strategic move to attract a wider range of investors.
The proceeds from the IPO will be used to expand the capacity of Ola Electric’s cell manufacturing plant from 5 GWh to 6.4 GWh. The company will be allocating Rs 1,227.6 crore for this purpose.
Additionally, Rs 1,600 crore will be directed towards research and product development. Also, Rs 800 crore will be used to repay debts, and Rs 350 crore will be allocated for organic growth initiatives.
Ola Electric is set to open its IPO for subscription on Friday, August 2, 2024. The IPO comprises a fresh issue of equity shares up to Rs 5,500 crore and an offer for sale (OFS) of 8.49 crore equity shares by promoters and investors.
The price band for the IPO is set between Rs 72 and Rs 76 per share, making it one of the largest IPOs in the country this year. The offering will close on Tuesday, August 6.
It has also been announced that the bidding for anchor investors will start a day earlier on August 1. Notably, the company will offer a discount of ₹7 per share for certain eligible employees, and 10% of the IPO is reserved for retail investors.
Ola Electric’s Financial Performance
Ola Electric’s financial performance in recent years showcases both its rapid growth and the challenges it faces. The company’s revenue for FY24 reached Rs 5,243.27 crore, nearly doubling from Rs 2,782.69 crore in FY23.
This growth was driven by increased sales of the Ola S1 and Ola S1 Pro scooters. Also, commencement of deliveries for the Ola S1 Air and Ola S1 X+ added to this growth. It has to be noted that the company’s losses have also widened to Rs 1,584 crore in FY24, up from Rs 1,472 crore in FY23.
Ola Electric currently has plans to continue investing heavily in its business to build capacity and scale operations. The company aims to introduce new products and expand its sales footprint in international markets, which could result in higher operating costs.
Additionally, the potential impact of losing eligibility for the EMPS 2024 subsidy could affect the company’s competitiveness.