Ola Electric's IPO is India's Biggest in Two Years

Shares of Ola Electric, a Bengaluru-based electric vehicle manufacturer backed by investors like SoftBank and Temasek, surged to ₹91.20 (approximately $1.1) after debuting at ₹76, the upper limit of its $733 million IPO price range. This valuation is notably 26% lower than the $5.4 billion achieved in an October 2023 funding round and significantly below the initial IPO target of $6.5 billion to $8 billion. The stock's performance on local exchanges resulted in a market capitalization of $4.8 billion for the company. Ola Electric has established itself as a leader in India's electric two-wheeler market, holding a 46% market share. Since launching its first electric scooter in December 2021, the company has sold over 330,000 units in the financial year ending March 2024. However, it continues to face financial hurdles, reporting a net loss of ₹16 billion (about $200.5 million) and an EBITDA loss of ₹13 billion (approximately $162.8 million) against annual revenues of ₹50 billion (around $626.3 million). To enhance its operational efficiency, Ola Electric is investing in vertical integration, focusing on developing its own battery cell technology and expanding manufacturing capabilities. The company aims to increase its production capacity to 20GWh by the second quarter of 2026, positioning itself for future growth in the electric vehicle sector. The Indian electric vehicle market is anticipated to grow significantly, with Macquarie forecasting gradual increases in electric two-wheeler market penetration rates. However, recent cuts in government subsidies have posed challenges to growth. Despite this, the market has seen consolidation, with the Herfindahl-Hirschman Index (HHI) indicating increased concentration in the sector.