Ola Electric IPO: From key investors to risks, here are 10 things to know from RHP before investing to ₹6,146 cr issue

Ola Electric IPO: The much-awaited initial public offering of Ola Electric Mobility Ltd is all set to hit the D-Street this week on Friday, August 2. The Ola Electric IPO, which has a price band set in the range of ₹72 to ₹76, will close on Tuesday, August 6.

The initial offering consists of an offer for sale up to 84.94 million shares and a new issue of ₹5,500 crore. Offer for sale (OFS) is worth at ₹645.96 crore, which is the highest price range. The issuance size would be 6,145.96 crore rupees in total. The company's total market value is expected to be approximately ₹33,500 crore.

The OFS will see the sale of 3.79 crore and 41.79 lakh equity shares, respectively, by promoters Bhavish Aggarwal and Indus Trust. Following the conversion of CCPS, SVF II Ostrich (DE) LLC, the company's largest stakeholder with a 21.98%ownership (or 8.1 crore shares), will offload 2.38 crore shares via the OFS.

The company intends to use the net proceeds to finance the following goals: investing in research and product development; paying down debt incurred by its subsidiary, OET; funding expenditures for organic growth initiatives; and general corporate purposes. Capital expenditures will be incurred by OCT, its subsidiary, to expand the capacity of its cell manufacturing plant from 5GWh to 6.4 GWh, which is classified as phase 2 under the expansion plan.

Ola Electric IPO has reserved not less than 75% of the shares in the public issue for qualified institutional buyers (QIB), not more than 15% for non-institutional Institutional Investors (NII), and not more than 10% of the offer is reserved for retail investors.

The Ola Electric IPO basis for share allocation is expected to be finalised on Wednesday, August 7. The business will commence refunds on Thursday, August 8, and the shares will be deposited to the allottees' demat accounts the same day as the refund. Ola Electric share price is likely to be listed on BSE and NSE on Friday, August 9.

The book running lead managers of the OLA Electric IPO are Kotak Mahindra Capital Company Ltd, Bofa Securities India Ltd, Axis Capital Ltd, SBI Capital Markets Ltd, Citigroup Global Markets India Private Ltd, Goldman Sachs (India) Securities Private Ltd, ICICI Securities Ltd, and Bob Capital Markets Ltd. The registrar for the issue is Link Intime India Private Ltd.

Here are 10 key things from the Red Herring Prospectus (RHP) that investors might want to know before subscribing to the issue.

Ola Electric IPO Promoters and Shareholders

The company's promoter is Bhavish Aggarwal. With 1,361,875,240 equity shares with a face value of Rs. 10 apiece, the promoter owns 36.94% of the company's issued, subscribed, and paid-up equity share capital.

Money Control reported that, actor and filmmaker, Farhan Akhtar purchased two shares for ₹2.14 crore, while Zoya Akhtar purchased a single Series C preference share for ₹1.07 crore. In addition, Ritesh Sidhwani, who alongside Farhan co-founded the film production company Excel Entertainment, purchased two shares in Ola Electric's Series C financing round.

Ola Electric IPO Peers

The company's listed peers are TVS Motors (with a P/E of 68.99), Eicher Motors (with a P/E of 33.58), Bajaj Auto (with a P/E of 34.02), and Hero MotoCorp (with a P/E of 28.89).

Ola Electric Mobility Business

The firm, which manufactures EVs and their components, is a pure electric vehicle (EV) player in India, developing vertically integrated technology and production capabilities. At the Ola Futurefactory, EVs and some essential EV components are produced. In addition to announcing four new goods, they have delivered seven products. They run an omnichannel, direct-to-customer distribution network throughout India, with 431 service centres and 870 experience centres as of March 31, 2024.

Ola Electric Mobility Group companies

OLA Financial Services Private Ltd, Ola Fleet Technologies Private Ltd, Ola Stores Technologies Private Ltd, Pisces eServices Private Ltd, ANI Technologies Private Ltd, Geospoc Geospatial Services Private Ltd, and Krutrim SI Designs Private Ltd are the Indian group companies and Ola USA Inc. is the foreign group company.

Ola Electric Mobility Industry

Redseer Report states that because to E2Ws' favourable total cost of ownership and the production-linked incentives and subsidies offered by the Indian government to encourage domestic EV manufacture and adoption, EVs are leading the charge in India's electrification of transportation.

The E2W industry in India is predicted to grow at a CAGR of 11% to reach a size of US$35 billion ( ₹2.8 trillion) to US$45 billion ( ₹3.6 trillion) in Fiscal 2028. E2W penetration in India is predicted to increase from roughly 5.4% of domestic 2W registrations in Fiscal 2024 to 41-56% of domestic 2W sales volume by Fiscal 2028. Moreover, areas such as SE Asia, LATAM, and Africa provide a substantial export potential for Indian E2W OEMs.

Ola Electric Mobility Manufacturing Unit

The Ola Futurefactory for EV manufacture, the Ola Gigafactory for cell manufacturing, and co-located suppliers are all part of the company's EV hub that is being constructed in Tamil Nadu, India.

While Ola is constructing an EV hub in the Tamil Nadu districts of Krishnagiri and Dharmapuri, it already has a Futurefactory, Gigafactory, and Battery Innovation Center in Bengaluru.

Ola Electric Mobility Products

The Ola S1 scooter models—Ola S1 Pro, Ola S1 Air, Ola S1 X+, Ola S1 X (2 kWh), and Ola S1 X (3 kWh)—are built on the current EV scooter Generation 2 platform. For its recently unveiled motorbike line, which consists of the Diamondhead, Adventure, Roadster, and Cruiser models, it intends to adopt a similar platform strategy.

Ola Electric Mobility Financials

Between March 31, 2024, and March 31, 2023, Ola Electric Mobility Ltd.'s profit after tax (PAT) decreased by -7.63% while its sales climbed by 88.42%.

Ola Electric Mobility key risks

• The firm has experienced losses and negative cash flows from operations from its founding, including their Material Subsidiaries, Ola Electric Technologies Private Ltd and Ola Cell Technologies Private Ltd.
• The company's experience producing EVs is really short. Whether they operate at a holding company level or as subsidiaries, there is no guarantee that they will be successful or cost-effective in the future.

Lock-in of equity shares allotted to anchor investors

A 90-day lock-in period applies to 50% of the equity shares allotted to anchor investors under the anchor investor portion, and a 30-day lock-in period is imposed on the remaining equity shares allotted to anchor investors under the anchor investor portion.

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