TITLE:
Ola Electric's IPO Journey: Navigating Growth, Challenges, and the Future of India's EV Market
CATEGORY : BUSINESS
CONTENT:
source: OLA My guess is that this is just a lot of guess work but anyways let's dig in now to their DRHP their Draft Red Herring Perspectives and find out more about this company and their IPO with over 30% market share ola electric is the leader in the two-wheeler EV segment here in India and here's a look at some of their latest numbers from November of 2023 a total of 91242 two- wheeler EV’s were sold in India overall and 29,808 of these were made by ola electric that's 32% of the market PHOTO Credit:business insider What make’s this particularly impressive is the fact that ola electric only started their electric scooters in December of 2021 so it's only been 2 years and they're already the market leader their growth is also made evident by their explosive Revenue increase so their revenue has grown by 7x from just 373 CR rupees in fy22 to 2631 CR rupees in FY 23 How did they do this well it has come at a pretty steep cost even though ola electric has managed to outgrow its competitors they've been doing it by burning lots of cash in fact Ola made 1,47 72 Cores and losses in FY 23 alone and up until now they've used $1.5 billion of VC money to get here they've used this $1.5 billion to set up the world's largest electric two-wheeler Factory and also to build India's largest Gigafactory to build in-house batteries for their electric scooters Source:OLA This massive investment into setting up EV infrastructure has helped them to gain a huge lead over their competitors and it also helps that they have other businesses too through the Ola brand like for example their bike taxi business which further drives sales of their electric scooters considering the government of India's push into EVs and also India's low adoption of electric two wheeler so far penetration is sitting at just 4.5% the potential for growth here is huge. Ola electric is well placed to capitalize on this opportunity that said though there are definitely a lot of people who are still skeptical about the future success of Ola electric because the company has managed to grow on the back of VC investment when profits weren't a necessity but now that they're going public a lot of people are going to be expecting them to turn profitable and according to a report Ola’s already cut down their sales Target for FY 24. Which was projected at 882,000 in July to just 300,000 which is a sharp 60% drop and the reason for this drop is the government of India cutting down on subsidies that they're offering to electric scooter companies and this has also led to Ola electric delaying their profitability projections by Year from FY 24 to FY25. In conclusion, Ola Electric's IPO marks a milestone, showcasing impressive market leadership with 32% share in India's two wheeler EV segment Despite exponential revenue growth concerns arise as losses mount. The company's pivot towards profitability faces challenges with revised targets and subsidy cuts impacting projections and the future of Ola Electric awaits scrutiny amid high expectations, So we're just going to have to wait and see how this all plays out
Ola Electric
OLA officially India’s first ever EV company to file for an IPO they’re planning on raising 5,500 rupees through this Initial public offering (IPO) as part of a fresh issue and they’re also expected to raise another 1,750 CR rupees through an offer for sale route too now at this point we don’t yet know the exact valuation at which Ola electric is planning on raising these funds at they were last valued at $5.4 billion and various media companies have been reporting that they’re planning to raise at a valuation of between $6.5 to 8 billion.
My guess is that this is just a lot of guess work but anyways let’s dig in now to their DRHP their Draft Red Herring Perspectives and find out more about this company and their IPO with over 30% market share ola electric is the leader in the two-wheeler EV segment here in India and here’s a look at some of their latest numbers from November of 2023 a total of 91242 two- wheeler EV’s were sold in India overall and 29,808 of these were made by ola electric that’s 32% of the market
What make’s this particularly impressive is the fact that ola electric only started their electric scooters in December of 2021 so it’s only been 2 years and they’re already the market leader their growth is also made evident by their explosive Revenue increase so their revenue has grown by 7x from just 373 CR rupees in fy22 to 2631 CR rupees in FY 23
How did they do this well it has come at a pretty steep cost even though ola electric has managed to outgrow its competitors they’ve been doing it by burning lots of cash in fact Ola made 1,47 72 Cores and losses in FY 23 alone and up until now they’ve used $1.5 billion of VC money to get here they’ve used this $1.5 billion to set up the world’s largest electric two-wheeler Factory and also to build India’s largest Gigafactory to build in-house batteries for their electric scooters
This massive investment into setting up EV infrastructure has helped them to gain a huge lead over their competitors and it also helps that they have other businesses too through the Ola brand like for example their bike taxi business which further drives sales of their electric scooters considering the government of India’s push into EVs and also India’s low adoption of electric two wheeler so far penetration is sitting at just 4.5% the potential for growth here is huge.
Ola electric is well placed to capitalize on this opportunity that said though there are definitely a lot of people who are still skeptical about the future success of Ola electric because the company has managed to grow on the back of VC investment when profits weren’t a necessity but now that they’re going public a lot of people are going to be expecting them to turn profitable and according to a report Ola’s already cut down their sales Target for FY 24.
Which was projected at 882,000 in July to just 300,000 which is a sharp 60% drop and the reason for this drop is the government of India cutting down on subsidies that they’re offering to electric scooter companies and this has also led to Ola electric delaying their profitability projections by Year from FY 24 to FY25.
In conclusion, Ola Electric’s IPO marks a milestone, showcasing impressive market leadership with 32% share in India’s two wheeler EV segment Despite exponential revenue growth concerns arise as losses mount. The company’s pivot towards profitability faces challenges with revised targets and subsidy cuts impacting projections and the future of Ola Electric awaits scrutiny amid high expectations, So we’re just going to have to wait and see how this all plays out
