Ola Electric IPO

Ola Electric Limited

Ola Electric IPO Details

Bidding DatesMin. InvestmentLot SizePrice Range
To be announced------
Issue SizeIPO Doc
5500.00Cr
DRHP PDF

About Ola Electric

OLA Electric manufactures electric vehicles (EVs) and core EV components in India. The company develops comprehensive technology and manufacturing capabilities for EVs and EV components, including battery packs, motors, and vehicle frames at the Ola Futurefactory. Its core business revolves around seizing opportunities arising from the demand for EVs in India. They also aim to explore potential exports of their EVs in selected international markets. Since its initial product announcement in August 2021, OLA Electric has introduced a total of four products and revealed plans for six additional ones. The Ola S1 Pro, their first EV model, began deliveries in December 2021, followed by subsequent models such as the Ola S1, Ola S1 Air, and Ola S1 X+. The company also announced new EV scooter models, Ola S1 X (2 kWh) and Ola S1 X (3 kWh), along with a lineup of motorcycles named Diamondhead, Adventure, Roadster, and Cruiser, on August 15, 2023. Deliveries for these new models are planned in Fiscal year 2025 and 2026. Ola Electric is also setting up its EV hub in Krishnagiri and Dharmapuri districts in Tamil Nadu, India, which includes the Ola Futurefactory, Ola Gigafactory, and co-located suppliers in Krishnagiri district.;
Parent Organisation
Ola Electric Limited
Founded
2017
Managing Director
Mr. Bhavish Aggarwal

Strengths & Risks

  • OLA Electric is a leading player in India's fast-growing electric two-wheeler (E2W) market. The company anticipates E2W penetration growth from 4.5% in 2023 to 41-56% in 2028.
  • OLA Electric led India’s E2W market with 31% of total E2W registrations in September 2023.
  • Ola Electric’s in-house R&D spans India, the UK, and the US, focusing on EV technologies and core components. The company’s R&D efforts concentrate on five key technologies: software, electronics, motor and drivetrain, cells and battery packs, and manufacturing technology.
  • Ola Futurefactory is India's largest automated E2W manufacturing plant, with an installed capacity of one million units per year (Sep 2023).
  • Ola Electric’s key business strategy centers on platform-focused product development, utilizing shared elements like a modular electric powertrain with a battery pack, BMS (battery management system), motors, power electronics module, and software. This approach reduces both estimated product development costs and time to market for new EV models.
  • The company has a digitally driven D2C (direct to customer) sales and service model. This allows cost advantages, low vehicle inventories at experience centers and centralized distribution. The system enhances demand forecasting and facilitates precise supply orders and production schedules.
  • According to the Redseer Report, Ola Electric is the only EV manufacturer in India that is a beneficiary of two Government of India PLI schemes: the Automobile PLI Scheme and the Cell PLI Scheme.
  • Ola Electric, established in 2017, has a limited operating history in the EV market and has consistently incurred losses. For instance, they reported losses before tax amounting to ₹267.16 crores for the three months ending June 30, 2023, and ₹1,472.08 crores in Fiscal 2023.
  • The company has heavily invested in research and development, with a focus on cell manufacturing capabilities. However, there is no guarantee that these investments will yield profitable returns, posing a substantial financial risk.
  • As batteries in Ola Electric's scooters reach their lifecycle end, the potential high replacement cost could deter customers. This risk threatens customer retention and diminishes demand for their EVs.
  • The company's competitiveness is partly reliant on government incentives like the FAME subsidy and PLI schemes. Any reduction, delay, or elimination of these incentives could significantly increase the cost of Ola Electric's vehicles, adversely affecting customer demand.
  • Global shortages of electronic parts, as experienced in 2022, can delay EV production. Such delays not only disrupt supply chains but also impact the company's ability to meet customer demand in a timely manner.
  • The company faces multiple risks related to the availability and pricing of quality cells. Lack of long-term contracts with cell suppliers and potential market shortages could lead to increased material costs and impact manufacturing and delivery timelines.
  • The company's success is partially contingent on the availability and accessibility of public charging stations. According to the Redseer report, charger gun locations in India are significantly less widespread than fuel pumps. This may deter some potential customers from purchasing the company’s EVs.
  • Ola Electric's operations heavily rely on technology. Vulnerabilities, bugs, or failures in this technology could delay vehicle launches and adversely affect business operations.
  • Despite paying a deposit and confirming online, customers can cancel their orders until the scooter is shipped. From October 2022 to May 2023, 6% to 9% of fully paid orders were canceled.
  • The gradual decline in the range of Ola Electric's EVs on a single charge over time may deter potential customers and negatively impact sales.
  • Ola Electric, its promoter, subsidiaries, and certain directors are involved in various legal proceedings. Adverse outcomes in these litigations could lead to substantial liabilities and penalties.
  • Manufacturing processes at Ola Electric's facilities carry potential hazards. Any incidents resulting in injury or property damage could lead to legal liabilities, operational disruptions, and negative publicity.

Financials

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Application details

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