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Shares in Ola Electric jumped on its debut on India’s stock market as investors bought into the country’s first offering from a fully battery-powered vehicle maker even after a globally volatile week for equities.
The electric-scooter maker, backed by Japan’s SoftBank and Singapore’s investment fund Temasek, listed $655mn worth of new shares and offloaded about $77mn of existing investor stock, in India’s largest initial public offering so far this year. Its timing came during the tumult across world markets following fears of a US recession and an interest rate rise in Japan.
Ola Electric advanced 20 per cent in Mumbai trading on Friday. It saw anchor investments from the likes of Nomura, Franklin Templeton, Fidelity and major Indian mutual funds, drawing in bids 4.3 times above the number of shares offered, which was lower than recent Indian offerings, according to National Stock Exchange data.
Ahead of its IPO, Ola Electric had slashed its valuation by a quarter to about $4bn as it sought to lure investors, many of which have soured on unprofitable Indian start-ups.
“EV has been a buzzing theme for a long time,” said Varun Baxi, an analyst at brokerage Nirmal Bang. “The anchor book looked impressive.”
At a listing ceremony at the National Stock Exchange in Mumbai, Ola Electric’s co-founder and chair Bhavish Aggarwal said the company had “built a new industry in India and led the EV revolution”.
“We were written off from day one,” he added. “We fought the naysayers and disbelievers to build something that we all can be proud of . . . our destination is still far ahead.”
Ola Electric’s listing is part of an expected bumper year for Indian IPOs as domestic investors pile into equities like never before. Hyundai Motors’ local arm, as well as takeaway and grocery app Swiggy, are set to raise collectively more than $4bn in public debuts.
The float also marks a new milestone for a company that only began delivering its first electric scooters in 2021, aggressively scaling up to become the market leader in India, with a share of more than a third of all EV scooter sales.
India’s government is pushing for wider adoption of EVs in a country where only 5 per cent of two-wheelers are electric. New Delhi has provided incentives to companies including Ola Electric to increase production, but sales of battery-powered vehicles have fallen off in recent months as some government subsidies were reduced.
“They are gaining market share,” Ravi Gupta, an automobile analyst at InCred Capital in Mumbai, said of Ola Electric. But “the dynamics of the industry remain under pressure”.
Aggarwal’s hard-charging image and drive to build out India’s nascent EV industry have drawn comparisons with Elon Musk. He has dismissed criticism of his company’s intensive work culture which has been attributed to a nearly 50 per cent annual attrition rate.
“I’m not here to win friends,” he recently told the Financial Times. “People need to come in with fire in their belly.”
Ola Electric plans to use the IPO funds to invest in a battery factory in southern India, pay down debts and fund research and development.
Some analysts are sceptical of the company’s prospects given its continued losses, which widened 8 per cent in the most recent financial year to Rs15.8bn ($188mn) even after a 90 per cent rise in revenue.
Mihir Manek at Aditya Birla Capital last week recommended avoiding the Ola Electric issue, calling it “expensive on every front” with a “rich” valuation of 6.5 times annual sales, “leaving little on the table for investors”.
Manek added: “It is still a very young company in such a huge and capital-intensive sector.”