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Bhavish Aggarwal's Ola Electric Unveils IPO Plans, Sets Sights on Rs 5,500 Crore

Ola Electric's Mega IPO - Navigating Risks and Rewards

23 December 2023


Kunal Tyagi

India produced 3X more unicorns than China in 2022.png
  • Ola Electric's IPO, aiming to raise Rs 5,500 crore, marks a crucial step for the company, filed with SEBI through a DRHP led by Bhavish Aggarwal.

  • Key selling shareholders in the IPO include Bhavish Aggarwal, SoftBank, Tiger Global, and others, with Aggarwal set to divest 47.4 million shares, making him the largest seller.

  • Despite a surge in losses by 87.76% to Rs 1,472 crore, Ola Electric plans to utilize raised funds for capacity expansion, debt repayment, research, and development, while facing challenges such as intense competition and the founder's involvement in a new AI startup.

The highly anticipated Initial Public Offering (IPO) of Ola Electric, led by Bhavish Aggarwal, has taken a significant stride forward as the company filed its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI). With plans to raise Rs 5,500 crore through a combination of fresh equity shares and an offer for sale (OFS), the IPO is a pivotal move for Ola Electric as it aims to bolster its market presence and capabilities.

The selling shareholders, including Bhavish Aggarwal, Indus Trust, Alpha Wave, Tiger Global, and SoftBank, are set to participate in the OFS. Aggarwal himself will divest 47.4 million shares, making him the largest seller in the offering. Despite Bhavish Aggarwal being the single largest shareholder, SoftBank holds the largest external stake at 21.98%, followed by Tiger Global at 6.03%.

Ola Electric's utilization of the raised funds is earmarked for expanding the capacity of its cell manufacturing plant, repaying debts, investing in research and development, and supporting organic growth initiatives. However, the company has witnessed a surge in losses, increasing by 87.76% to Rs 1,472 crore despite a seven-fold revenue increase to Rs 2,631 crore in the fiscal year ending March 2023.

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Looking ahead, Ola Electric has ambitious plans to introduce a motorcycle lineup by the end of the next year, acknowledging potential challenges such as continued operating losses and the involvement of Bhavish Aggarwal in his new AI startup, Krutrum AI.

As investors consider subscribing to Ola Electric's IPO, it's crucial to examine the potential risks and opportunities. Ola's revenue concentration on a limited range of electric scooters poses a risk, as does its dependence on imported resources like lithium. The intense competition in the Indian EV market and advancements in technology also present challenges. On the positive side, Ola Electric has demonstrated robust sales figures and aims to capitalize on the booming Indian electric vehicle market, supported by the government's favorable policies.

In conclusion, the road ahead for Ola Electric's IPO is a mix of challenges and opportunities. Investors must carefully weigh the risks against the company's potential for growth in the burgeoning electric vehicle market, recognizing the evolving dynamics of the industry and the need for strategic moves to navigate the future successfully.

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