Ola Electric IPO: Issue details, objectives, risk factors & more; Check 10 key things to know from DRHP

Ola Electric IPO: SoftBank Group-backed e-scooter maker Ola Electric filed its preliminary draft papers on Friday, December 22, with capital markets regulator Securities and Exchange Board of India (SEBI) to raise Rs5,500 crore through an initial public offering (IPO).

This will be the first IPO by an Indian electric vehicle (EV) maker and also the first by a two-wheeler maker in India since the debut of Bajaj Auto in 2008. Backed by Japan's SoftBank and Singapore's investment firm Temasek, the Bengaluru-based EV maker was valued at $5.4 billion in a recent funding round.

Ola Electric IPO: Here are the top 10 things from DRHP

1.IPO Details: The issue is a fresh issue of equity shares up to ₹5,500 crore and an offer for sale (OFS) of 95,191,195 equity shares at a face value of ₹10. Ola Electric's founder Bhavish Aggarwal will sell up to 47.4 million shares, according to the draft papers dated December 22. Aggarwal had also invested ₹45 lakh in Pune-based EV startup Tork Motorcycles.

Also Read: Tesla on two wheels? Ola Electric faces service challenges as demand for electric scooters surges

2.IPO Dates: Ola Electric has not announced the opening ang closing dates for the IPO subscription yet in its DRHP, however, several media reports claim that the the public issue will open in early 2024. The offer price for the issue and IPO price band have also not been announced so far.

3.IPO Reservation: The issue is being made through the book-building process, where in not less than 75 per cent of the issue shall be available for allocation on a proportionate basis to qualified institutional buyers (QIBs), not more than 15 per cent of the issue will be available for allocation to non-institutional investors (NIIs), and not more than 10 per cent of the issue shall be available for allocation to retail individual bidders.

4.IPO Objectives: As per the DRHP, net proceeds of up to ₹1226.4 crore from the fresh issue will be used for capital expenditure to be incurred by the subsidiary, Ola Cell Technologies (OCT) for the Ola Gigafactory project. Along with this, ₹1,600 crore will be used towards investment into research and development (R&D) and ₹350 crore will be utilised for organic growth initiatives and general corporate purposes. Additionally, ₹800 crore will be used to repay/pre-pay the indebtedness incurred by subsidiary, Ola Electric Technologies (OET).

5.IPO book-running lead managers: Kotak Mahindra Capital Company Limited, Citigroup Global Markets India Private Limited, BofA Securities India Limited, Goldman Sachs (India) Securities Private Limited, Axis Capital Limited, ICICI Securities Limited, SBI Capital Markets Limited and BOB Capital Markets Limited are the book-running lead managers, and Link Intime India Private Limited is the registrar of the offer. 

6.Business Model: The business model is founded on three key scalable platforms. Firstly, R&D and technology platform with in-house design and development across EV technologies and components. Secondly, adaptable manufacturing and supply chain platform, and thirdly, a D2C omnichannel distribution platform comprising of 935 experience centres situated across India which includes 414 service centres, as of October 31, 2023.

7.Company Financials: For the fiscal year 2023, the company's revenue from operations increased more than seven times to ₹2,630.93 crore against ₹373.42 crore a year ago. For the three months ended June 30, 2023, revenue from operations stood at ₹1,242.75 crore. The company topped the charts among Indian incorporated electric 2-wheelers (E2Ws) and original equipment manufacturers (OEMs) in terms of revenue from E2W sales in FY23.

Also Read: Temasek leads $140 million funding in Ola Electric

8.Product Portfolio: Ola Electric introduced its first EV model – S1 Pro in August 2021 and currently has a portfolio of five scooter models. Within nine months of Ola Electric delivering its first EV scooter, it went on to become the best-selling E2W player in India based on registrations listed on the VAHAN portal of the road and highways ministry. As of three-months period ended June 30, 2023, it has an E2W market share of 31 per cent and aims to explore exporting EVs to specific international markets, according to the DRHP.

9. Losses Registered in FY23: Ola Electric's net loss nearly doubled to ₹1,472 crore in FY23, from ₹784.1 crore in the previous fiscal year, as expenses surged significantly. The IPO-bound electric vehicle company reported an EBITDA loss of ₹1,318 crore as its total expenses jumped to ₹3,383 crore, in comparison to ₹1,240 crore in FY22. The company saw its losses growing nearly 293 per cent to ₹784 crore in FY22.

10.Key risk factors to the IPO: Among the key risk factors to the IPO, Ola Electric said in its DRHP that it has a limited operating history and has incurred losses and negative cash flows from operations. It adds that it may continue to incur losses in near-term. Defects and quality issues impacts the company's manufacturing timelines. The company also faces various risks that could hinder its in-house cell manufacturing capabilities at the Ola Gigafactory.