• Dated 04^th Aug.
• IPO is open from 2-6^th Aug, at ₹ 72-76 /share
• The IPO offering is large, at ₹ 6,150 cr.
• Mid-Cap firm with Mkt cap ₹ 33,500 cr.
• Sector: Automobile, EV, 2W
• Opinion: High-risk takers can buy with a 2-year perspective

Summary

• Ola Electric is a startup by serial entrepreneur Bhavish Agarwal for Electric two Wheelers. With a good brand drawn from Ola Cabs, Ola Electric has created the products, factories and sales network, and grabbed a 35% market share in India in E2W. Revenue grew 88% in FY24, indicating that Ola may have hit the ‘growth inflexion point’ in the hockey stick formation. The organization and structure set-up looks good to handle the possible growth. The overall 2W industry size and growth offer a massive opportunity for disruption. The products are beneficial to reduce pollution from fossil fuels and are aligned with electrification & renewables initiatives. Govt. of India policies are helpful with Ola using FAME and PLI incentives. E4W adoption in China is a good early indicator of possible E2W adoption in India. Our analysis indicates Ola can hit profitability by FY26, in two years.
• Risks: 1) Typical startup risks of small possibility of success of massive disruption and ambitious goals; Typical IPO risks of undiscovered firm 2) currently cash-burning business 3) Dependence on China for RM – is being overcome through R&D and new mfg. facilities 4) Competition – Entry of new startup players and E2W plans by current ICE players 5) support drying up from GoI policies as industry accelerates 6) Volatility in RM prices
• Opinion: High-risk takers can buy with a 2-year perspective

Here is a note on Ola Electric Mobility Ltd (OLA).

IPO highlights

• IPO application dates: 2^nd – 6^th Aug’24, with Price Band: range of ₹72 – 76 per share, of FV: ₹10.
• IPO Size is of ₹ 6,150 cr. – Offer for Sale 8.49 cr. shares (₹ 645 cr.) and Fresh Issue 72.3 cr. (₹ 5,500 cr.)
• Lot Size: Investors can bid for a minimum of 195 shares and in multiples of this.
• The promoter is serial entrepreneur Bhavish Aggarwal who owns 36.94%.
• The main objectives of the IPO Issue  are
  • From the Fresh Issue, Capex is to be incurred for expansion of capacity of its cell mfg. plant from 5 GWh to 6.4 GWh, classified as phase 2 of expansion plan, reduction of debt; Investment into R&D and product development; Expenditure for organic growth initiatives, and General corporate purposes.
  • From OFS, the Promoters and some of the prior investors get a chance to exit.
• The IPO share quotas are QIBs: NIIs: Retail is 75:15:10. (Qualified, Non-Institutional Investors)
• The unofficial/ grey market premium of Ola is ₹ 9/share over IPO price. This is a positive.
• The IPO allotment is likely to be finalized on Aug 7^th, refunds will be on Aug 8^th, and also crediting of shares to eligible allottees. Ola Electric shares will list on BSE and NSE, on Aug 9th.

See report in PDF format

Disclaimers and Disclosures

• All assumptions are mentioned in main body of report along with Fig 7 Financial Projections.
• Punit Jain discloses that he has no shareholding in Ola Electric Mobility, or any group company. He was not involved in the IPO preparation. In addition, JMI and its promoters/ employees have no direct or financial interest in these companies, and no known material conflict of interest as on date of publication of this report.
• This document has been prepared by JainMatrix Investments Bangalore (JMI), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. This report should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JMI has not independently verified the accuracy or completeness of the same. Neither JMI nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Investment in the securities market are subject to market risks. Read all the related documents carefully before investing. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from a RIA Registered Investment Advisor. JMI has been an equity investment adviser commercially since Nov 2012, and a SEBI certified and registered since 2016, under SEBI (Research Analysts) Regulations. Registration granted by SEBI, and certification from NISM in no way guarantee the performance of the Research Analyst or provide any assurance of returns to investors.
• Any questions should be directed to punit.jain@jainmatrix.com. Name of the RA as registered with SEBI – Punit Jain, SEBI Registration No. INH200002747. Logo/brand name –