The shares of Ola Electric Mobility Ltd. made a quiet stock market debut with its shares getting listed at par against its issue price of ₹76 on the NSE. Similarly, the stock kicked-off its maiden trading session at BSE ₹75.99. Post listing, the stock hit a 20% upper circuit limit on Friday (August 9).
Ahead of the listing, Ola Electric shares were trading at a discount of ₹3 in the unlisted market.
Given the current market conditions and the company’s financial performance, Shivani Nyati of Swastika Investmart expected a subdued listing. “Investors will be closely watching the IPO listing to gauge market sentiment towards Ola Electric’s business model and valuation,” she said.
Nyati said that Ola Electric’s vision to become a global EV leader, backed by significant investments in R&D and manufacturing, is commendable. However, the company’s current financial performance, marked by consistent losses, raises concerns. High competition, pricing pressures, and employee attrition further add to the challenges.
Based on subscription figures and the overall market sentiment, there are very high possibilities of a flat to discounted listing, in the range of -5% to -10% in the best-case scenario, said Prashanth Tapse, Sr VP Research at Mehta Equities. He added that a discounted listing would be justified given the weak financials, the risk of negative net cash flows in the past, and the potential for future negative cash flows.
Tapse advised only risk-taking investors to continue holding with a minimum holding period of 2-3 years
If the stock is available well below its IPO price, Tapse recommended risk-taking investors to ‘Accumulate’ on every dip. He said that Ola Electric’s long-term story is intact but a lot of ups and downs may be seen in the short term.
Parth Shah of StoxBox also expected shares of Ola Electric to list at a discount of 3% above its issue price. Post listing, Shah advises market participants who have been allotted the shares to hold them from a medium to long-term perspective.
“On account of positive EV market outlook, favourable regulatory environment, large quantum of fresh issue in the IPO, announcement of new models along with the upcoming cell manufacturing unit (Gigafactory), we have a positive view for the company,” he said.
The IPO of Ola Electric was subscribed 4.27 times, driven by decent response from qualified institutional buyers and retail investors.
The issue was open for bidding between August 2 and August 6, where the pure-play EV player had offered its shares in the fixed price band of ₹72-76 per share with a lot size of 195 shares.
Ola Electric Mobility raised a total of ₹6,146 crore from its IPO, which comprised of a fresh share sale of ₹5,500 crore and an offer-for-sale (OFS) up to 8.49 crore shares.
The company will use ₹1,600 crore of the net proceeds for investment in to research and development purposes. “We cannot assure you that such investment into research and development will proceed as planned and result in creation of tangible assets or achieve results as anticipated,” the company wrote as part of its risk factors.
Ola Electric is a pure EV play in India with integrated technology and manufacturing capabilities for EVs and EV components. It is involved in the manufacturing of EVs and core EV components, having delivered seven products and announced four new ones. Through an Omnichannel distribution network, Ola Electric has 870 experience centres, 431 service centres along with its website as on March 31, 2024.
The company has been loss-making and incurred a loss of ₹1,584 crore in financial year 2024, higher than the ₹1,472 crore loss it incurred in financial year 2023.
