Ola Electric Mobility’s initial public offering (IPO) has encountered a rocky start, with investor enthusiasm waning as the issue nears its conclusion. This is evident in the sharp decline of the grey market premium (GMP), a market indicator of anticipated listing gains, which has plummeted by a substantial 75%.
The Bengaluru-based electric vehicle (EV) giant is seeking to raise a substantial ₹ 6,145 crore through the IPO, comprising a fresh issue of ₹ 5,500 crore and an offer-for-sale (OFS) of existing shares. However, the market’s tepid response to the offering is a cause for concern.
As of the second day of bidding, the overall subscription stood at a modest 72%, indicating a lackluster response from investors. While the retail portion has garnered some interest, the quota reserved for qualified institutional buyers (QIBs) has remained notably subdued. This disparity in investor appetite highlights the prevailing sentiment towards the IPO.
Ola Electric, a prominent player in India’s burgeoning EV landscape, has positioned itself as a leader in the electric two-wheeler (E2W) segment. The company has been aggressively expanding its operations and has made significant investments in technology and manufacturing capabilities. Its focus on vertical integration, encompassing battery cells, motors, and vehicle frames, has been a key strategic move.
However, the company’s loss-making track record and the IPO’s rich valuation have raised concerns among investors. Brokerage firms have offered mixed assessments, with some highlighting the company’s market leadership and government support for the EV sector as positives. Conversely, others have expressed reservations about the company’s financial performance and the demanding valuation.
Despite the challenges, Ola Electric managed to secure a substantial ₹ 2,763 crore from anchor investors, a group of institutional investors who commit to buying shares before the IPO opens to the public. This infusion of capital provides a degree of financial stability to the company.
The company’s long-term prospects are tied to the growth of India’s EV market, which is expected to expand significantly in the coming years. The government’s push for electric mobility and the increasing consumer preference for eco-friendly vehicles present opportunities for Ola Electric. Additionally, the company’s foray into advanced battery cell manufacturing through its Ola Gigafactory could be a game-changer.
As the IPO draws to a close, the market’s final verdict on Ola Electric’s valuation and growth prospects will be determined. Investors will be keenly watching the subscription figures and the eventual listing price to gauge the market’s assessment of the company’s worth.
