Ola Electric IPO Subscription Status: A Comprehensive Overview

The Ola Electric Mobility IPO has recently made headlines as it garnered significant attention from investors, achieving full subscription by the second day of bidding. This article delves into the details of the IPO, its subscription status, and expert analyses to provide a comprehensive understanding of this pivotal event in the electric vehicle sector.

Subscription Status

As of the second day of bidding, the Ola Electric IPO was fully subscribed, with a notable performance across various investor categories. The employee section led the charge with an impressive subscription rate of 8.98 times. Retail investors showed a solid interest as well, subscribing 2.87 times, while non-institutional investors (NIIs) subscribed 1.11 times. However, the qualified institutional buyers (QIBs) portion lagged behind, achieving only 40% subscription.

According to data from the Bombay Stock Exchange (BSE), bids were received for 49,43,63,610 shares against the 46,51,59,451 shares offered, translating to a 1.06 times overall subscription. The initial share sale, which opened on August 2, raised eyebrows with a mere 35% subscription on its first day, indicating a somewhat tepid investor interest initially.

IPO Pricing and Structure

The IPO, valued at ₹6,145 crore, has set its price range between ₹72 and ₹76 for each equity share with a face value of ₹10. Prior to the subscription period, anchor investors committed a substantial ₹2,763 crore to the company, showcasing confidence in Ola Electric’s potential.

The share allocation for the IPO is structured as follows:

• 75% for qualified institutional buyers (QIB)
• 15% for non-institutional investors (NII)
• 10% for retail investors

Company Overview

Ola Electric is at the forefront of the electric vehicle revolution in India, producing not only electric two-wheelers but also essential components such as motors, battery packs, and vehicle chassis. The company aims to capitalize on the growing demand for electric vehicles (EVs) in India and plans to expand its market reach internationally.

Since launching its first electric vehicle, the Ola S1 Pro, in December 2021, the company has introduced additional models, including the Ola S1 Air, Ola S1 X+, and Ola S1 S1 by September 2022.

Expert Reviews

LKP Securities

According to LKP Securities, Ola Electric has secured Production Linked Incentive (PLI) benefits for its battery production facility and several of its top-selling models. This support is expected to enhance profitability in the coming years. The brokerage anticipates that the launch of new EV models will help Ola maintain its market share, which stood at 45% at the end of Q1, up from 39% in Q4. They recommend subscribing to the IPO with a long-term perspective, while keeping an eye on demand trends and loss reduction.

Choice Equity Broking Pvt Ltd

Choice Equity Broking highlights Ola Electric’s ambitious growth strategy, reflected in its substantial capital expenditures. They believe the IPO price is justified given the company’s leading position in the electric two-wheeler market and its backward integration initiatives. However, they caution that the company’s reliance on government subsidies and ongoing losses pose risks. They rate the IPO as "Subscribe with Caution," emphasizing the need for careful monitoring of operational performance.

IPO Financial Details

The Ola Electric IPO comprises a fresh issuance of equity shares up to ₹5,500 crore, alongside an offer for sale (OFS) of 8.49 crore equity shares by investors and promoters. Notably, Ola Electric’s founder, Bhavish Aggarwal, plans to sell approximately 3.8 crore shares under the OFS.

The funds raised will be utilized for various purposes, including debt repayment for its subsidiary, supporting organic growth initiatives, and investing in research and product development. Additionally, the company aims to expand its plant capacity from 5 GWh to 6.4 GWh as part of its phase 2 expansion plan.

Grey Market Premium

As of today, the grey market premium (GMP) for the Ola Electric Mobility IPO stands at +₹2.50, indicating that shares are trading at a premium in the grey market. This suggests a potential listing price of approximately ₹78.5, which is 3.29% higher than the upper end of the IPO price band.

Conclusion

The Ola Electric IPO has generated considerable interest, particularly among employees and retail investors. While the initial subscription rates were modest, the overall response has been positive, reflecting investor confidence in the electric vehicle sector’s growth potential. As the company continues to expand its product offerings and market presence, it remains to be seen how it will navigate the challenges of profitability and competition in the evolving landscape of electric mobility.

Investors are advised to conduct thorough research and consider expert opinions before making any investment decisions related to the Ola Electric IPO.