IPO screener: All eyes on Ola Electric listing today
Shares of Ola Electric Mobility will be listed on the bourses today. The IPO price has been pegged at ₹76. The public issue of Ola Electric Mobility, the first pure EV company to hit the capital market, saw a moderate response. The IPO was subscribed 4.27 times, with qualified institutional investors and retail investors showing more interest, as their respective portions were subscribed 5.31 times and 3.92 times, respectively. However, HNIs (non-institution investors) remained somewhat muted, as their reserved portion saw bids 2.40 times.
Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, said, “The much hyped Ola Electric offer received demand well below street expectation. Looking at the subscription figures and mood of the markets, there are very high possibilities of flat to discounted listing in the range of negative -5-10 per cent in the best case scenario.”
He added that a discounted listing would be justified based on weak financials and the risk of negative net cash flows in the past and future.
The ₹6,145.6-crore IPO, which came out with a price band of ₹72-76, comprised a fresh issue of ₹5,500 crore and an offer-for-sale (OFS) of ₹645.60 crore. The employee’s portion was the most aggressive as that window was subscribed 12 times.
Earlier, as part of the IPO, Ola had mobilised ₹2,763 crore from anchor investors.
Utility of funds
Funds raised will be used for expansion of the installed capacity of the Ola Giga factory from 5GWh to 6.4GWh; repayment or pre-payment, in full or in part, of Ola Electric Technologies, its material subsidiary, working capital borrowings; investment in research and product development, including investments in property, plant and equipment and intangible assets; organic growth initiatives; and general corporate purposes. Ola Electric Mobility is a pure EV player in India and is building vertically integrated technology and manufacturing capabilities for EVs and EV components, including cells. It manufactures EVs and certain core EV components like battery packs, motors and vehicle frames at the Ola Future factory.
According to Tapse, allotted investors should understand the risk of negative net cash flows in the past and future negative cash flows, which could adversely impact the company’s consolidated financial condition post-listing.
“Despite the company offering its shares at a well discounted price lower than last private placement valuation, IPO investors were not so bullish on the loss making company and may wait for better lower pricing post listing. Considering all the factors, we advise only risk taking investors to continue to hold with a minimum holding period of 2-3 years,” he said.