IPOs | Latest IPOs News | Upcoming IPOs | Ola Electric Mobility Limited | IPO advise | IPO call | IPO recommendation | IPO allotment Status| Financials | Shareholding

Industry : Auto - 2 & 3 Wheel

Ola Electric Mobility Limited View all IPOs

Price Band

Rs 72 – Rs 76

Ola Electric Mobility Limited is going public with a fresh issue and an offer for sale. The issue opens on 02nd August 2024.

MOJO CALL

Why

Avoid

MOJO CALL

Avoid

Neutral

Heavy supplier dependence for critical material

The company relies heavily on several suppliers for essential components, including lithium-ion cells, magnets, and electronic ICs. The top 10 suppliers account for 60% of the total supplies. Additionally, the company has been increasing its reliance on China for these critical components, with China's share rising from 7.9% in FY2022 to 36.9% in FY2024. The company plans on increasing its reliance on China for the critical minerals required in cell manufacturing which Ola plans to undertake on its own.

Increasing cost of cells

For Ola's S1 Pro Gen 1 model, the cost of lithium-ion cells has increased from 26.3% of the total costs in FY2022 to 32.3% in FY2024. The company lacks long-term contracts with suppliers, making it vulnerable to fluctuations in the availability and pricing of quality cells.

Uncertainty of turning profitable

The company's strong sales have been largely driven by the FAME subsidies provided by the government for electric vehicle purchases. These subsidies have made Ola's electric two-wheelers price-competitive with current ICE vehicles. In the future, such subsidies may no longer be available, potentially making the company's path to profitability more challenging.

Valuations

Based on FY2024 financials, the company has made a loss of Rs 1,585 crore and has been unprofitable for the past 3 years. The company is asking for a Price-to-sales of 6.7x which is higher than the legacy companies such as Bajaj Auto and TVS which trade at P/S of 5.8x and 3.1x of their sales after being profitable. Given the uncertainty of turning profitable, we recommend avoiding this issue.

Issue Details

Issue Opens	02nd August 2024
Issue Closes	06th August 2024
Price Band	Rs 72 – Rs 76
Issue size (Upper Band)	Rs. 6145.56 Cr
Issue Type	FRESH ISSUE & OFFER FOR SALE
Market cap (based on upper band)	Rs. 33521.75 Cr
Sales- March 2024 (Rs./Crs)	5009.83 Cr
Net Profit - March 2024 (Rs./Crs)	-1584.40 Cr
Industry	Auto - 2 & 3 Wheel
Promoters	BHAVISH AGGARWAL
Lead Manager	Kotak Mahindra Capital, BofA Securities, Axis Capital, SBI Capital, CitiGroup, Goldman Sachs, ICICI Securities and BOB Capital.

Objective of the Issue

Details

Objectives of the Issue Offer for sale – Rs 645.46 cr & Fresh Issue – Rs 5,500 cr

The Objectives of the Offer are for:
1. Capital expenditure to be incurred by a subsidiary of the company – Rs 1,227.64 crore
2. Repayment or pre-payment, in full or part, of the indebtedness incurred by a subsidiary of the company – Rs 800 crore
3. Investment into research and product development – Rs 1,600 crore
4. Expenditure to be incurred for organic growth initiatives – Rs 350 crore
5. General corporate purposes – Rs 1522.36 crore

List of Shareholders Selling Their Stake

Name	Type	Value of Shares (in Rs)	% of OFS
Bhavish Aggarwal	Promoter	2,88,15,56,036	45%
Indus Trust	Promoter Group	31,76,03,696	5%
Alpha Wave Ventures II	Institutional Investor	28,74,99,108	4%
Alpine Opportunity Fund VI	Institutional Investor	4,79,05,536	1%
Internet Fund III	Institutional Investor	48,34,27,716	7%
MacRitchie Investments	Institutional Investor	10,29,78,328	2%
Matrix Partners India	Institutional Investor	28,32,92,584	5%
SVF II Ostrich	Institutional Investor	1,81,31,52,368	28%
Tekne Private Ventures	Institutional Investor	7,41,44,156	1%
Ashna Advisors	Institutional Investor	4,57,38,928	1%

Business Operations

About Company

Ola Electric Mobility is an electric vehicle company that primarily manufactures electric vehicles and certain core components for electric vehicles such as battery packs, motors, and vehicle frames. As of 31st March 2024, the company held a market share of 35% in Indian E2W market.

Since August 2021, the company has launched seven new products and announced four. The Ola S1 Pro, the first EV model, was delivered in December 2021, followed by the Ola S1, Ola S1 Air, Ola S1 X and Ola S1 X+ in the following years.

On August 15, 2023, the company announced new EV models and a range of motorcycles including Diamondhead, Adventure, Roadster, and Cruiser.

The company operates through its own D2C network comprising of 870 experience centres and 431 service centres across the country.

Segment Revenue Breakup

Financials

Financial Overview

The company’s revenue grew by 1241% between FY2022 and FY2024 and stood at Rs 5,009.8 crore for FY2024.

In FY2024, the company’s Return on Net Worth stood at 33.57%, an improvement of 537bps from 28.20% recorded in FY2023.

For FY2024, the gross margins stood at 12.58%, a significant increase from 2.3% and -28.78% registered in FY2023 and FY2022 respectively.

Consequently, Operating margins for the company improved to -19.84%, from -43.02% and -157.27% recorded in FY2023 and FY2022 respectively.

The company has failed to generate positive cash flow from operations for the last three years. The company reported a CFO of negative Rs 633 crore in FY2024.

The company has a debt of Rs 2,710 crore as of 31st March 2024.

Financial Performance (Rs/crore)

Rs./Crs	FY 24	FY 23	FY 22
Revenue	5009.83	2630.93	373.42
Net Profit	-1584.40	-1472.08	-784.15