Ola Electric IPO Day 3: GMP, subscription status to review. Should you subscribe as bidding ends today?

Ola Electric IPO subscription status: The Ola Electric Mobility IPO was fully subscribed on the second day of the bidding. The employee section had the highest subscription rate, at 8.98 times. The retail component and non-institutional investors portion were subscribed 2.87 times and 1.11 times, respectively, while the qualified institutional buyer (QIBs) portion was subscribed 40%.

According to BSE data, bids were received for 49,43,63,610 shares in the initial share sale, whereas 46,51,59,451 shares were offered. This translates into a 1.06 times subscription.

On Friday, August 2, the first day of the bidding process, 35% of the ₹6,145 crore initial share offer of electric two-wheeler company Ola Electric Mobility was subscribed, indicating a lackluster level of investor interest.

For each equity share having a face value of ₹10, the price range for the offering has been fixed at between ₹72 and ₹76. Prior to the IPO subscription period commencing on Friday, August 2 and ending today (Tuesday, August 6), the anchor investors bestowed upon the company a total of ₹2,763 crore.

The Ola Electric IPO has set aside 75% of its shares for qualified institutional buyers (QIB), 15% for non-institutional institutional investors (NII), and 10% for retail investors.

Ola Electric produces electric vehicles (EVs) as well as some essential EV parts like motors, battery packs, and vehicle chassis. Its business strategy is to seize the opportunity presented by India's electrification of transportation and, in the future, sell its EVs to a few other countries. It started shipping the Ola S1 Pro, its first electric vehicle, in December 2021. The Ola S1 Air, Ola S1 X+, and Ola S1 S1 September 2022, all arrived after that.

Ola Electric IPO Review

LKP Securities

The business reportedly earned Production Linked Incentive (PLI) for both its battery production facility and a few of its best-selling models, according to the brokerage. In the years to come, this will help Ola increase their profitability. In addition to EV bike launches the next year, a plethora of new product releases should allow the firm to hold onto its market share (45% at the end of Q1 compared to 39% at the end of Q4). They predict that in the medium term, higher volumes will result in operating leverage and a reduction in losses. Lower battery costs ought to aid the cause as well.

Since Ola is the first pure play 2W EV, they believe Ola will lead the way based on the narrative of EV proliferation in the nation (current EV scooter penetration is at 15%). Thus, with a long-term view, the brokerage advises investors to SUBSCRIBE to this IPO while maintaining a watchful and cautious eye on the demand and, consequently, the decrease of losses for Ola.

Choice Equity Broking Pvt Ltd

According to the brokerage, Ola Electric's ambitious expansion objectives are reflected in the large capital expenditures it made in its early years and the massive capital outlay it has planned for the medium future. We think the requested price is acceptable given the company's continued dominance in the E2W market, the advantages of backward initiatives such cell manufacture, and its extensive use in energy storage applications.

The company's primary concerns are its loss-making operations and dependence on government subsidies to drive sales. If the current EMPS scheme is not extended into September 2024, operating leverage would not become active, maintaining the profitability distance. We thus rate the issue as "Subscribe with Caution."

Ola Electric IPO details

In addition to a fresh issuance of equity shares up to ₹5,500 crore, the Ola Electric IPO comprises an offer for sale (OFS) of 8.49 crore equity shares by investors and promoters. Under the OFS, Ola Electric's founder, Bhavish Aggarwal, will sell around 3.8 crore shares.

The business plans to pay down debt accumulated by its subsidiary, OET; support expenditures for organic growth efforts; engage in research and product development; and use the net proceeds for general corporate reasons. Its subsidiary OCT will have to spend capital money to increase the plant's capacity from 5 GWh to 6.4 GWh, which is categorised as phase 2 of the expansion plan.

Ola Electric IPO GMP today

Ola Electric Mobility IPO GMP today or grey market premium is +2.50. This indicates Ola Electric share price were trading at a premium of ₹2.50 in the grey market, according to investorgain.com.

Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price of Ola Electric share price was indicated at ₹78.5 apiece, which is 3.29% higher than the IPO price of ₹76.

'Grey market premium' indicates investors' readiness to pay more than the issue price.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.