After flat listing on domestic bourses, shares of Ola Electric Mobility surged as much as 20% to hit its upper circuit limit on Friday, making investors richer by ₹6,704 crore in a single session. The market capitalisation (m-cap) of Bhavish Aggarwal-led EV company surged to ₹40,226.77 crore at the end of day’s trade, with more than 4.75 crore shares changing hands over the counter. Ahead of listing on the stock exchanges, the m-cap of Ola stood at ₹33,522.31 crore.
Ola’s co-founder and CEO Aggarwal, who owns 132,39,60,029 shares in the company post IPO, is now worth ₹12,074.5 crore as shares of his firm ended 20% higher at ₹91.20 apiece. Aggarwal, 38, one of India’s youngest billionaire, sold 37,915,211 shares at ₹76 each via offer for sale, raising ₹288 crore.
Early today, Ola Electric, whose ₹6,146 crore IPO was the second-largest after LIC of India's ₹21,000 crore issue in May 2022, made a lackluster debut on the stock market, in an otherwise strong broader market. The shares of India’s largest electric two-wheeler manufacturer listed flat at ₹76 apiece at par with the issue price on the NSE. However, the auto stock gained momentum post-listing and was locked in its upper circuit limit of 20%.
The muted debut of the EV company was above Street expectations as Ola Electric shares were available at a discount of ₹3 in the grey market today. Ahead of opening of the IPO, the Bangalore-based company was commanding a grey market premium of ₹16.5 in the unlisted market as on July 30, which gradually dropped to a discount of ₹3 as the three-day IPO closed on August 6.
“Despite receiving demand well below street expectation, Ola listed well above street expectations can be attributed to market mood. Post listing, the short term view remain same due to weak financials and risk of negative cash flows in future and allotted investors should understand the risk before holding which could adversely impact its consolidated financial condition post listing,” says Prashanth Tapse, Senior VP (Research), Mehta Equities.
“Considering all the factors, we advise only risk taking investors to continue to hold with a minimum holding period of 2-3 years,” he adds.
Shivani Nyati, Head of Wealth, Swastika Investmart, says the flat listing, coupled with a mere 4.45 times subscription, underscores the challenges the company faces in gaining investor confidence.
She adds the flat listing highlights the need for Ola to demonstrate a clear path to profitability and navigate the complexities of the EV market effectively. “Investors are suggested to exit and book a minor profit, but those who want to take risks may hold their position by keeping a stop loss below ₹70,” she says.
The IPO of Ola, which opened between August 2-6, was subscribed 4.45 times, led by qualified institutional buyers (QIBs) as the quota reserved for them was booked 5.53 times. The retail portion was subscribed 4.05 times, followed by 2.51% in non-institutional investors (NIIs) segment. The quota for the employee was the most subscribed by 12.38 times. The EV manufacturer had reserved 75% of the issue for qualified institutional buyers, 15% for non-institutional bidders, and remaining 10% for retail investors.
The issue comprised a fresh issue of ₹5,500 crore and an offer for sale (OFS) of up to 8.49 crore shares by promoters and existing shareholders. At the upper end of the IPO price band of ₹72-76 per share, the company raised ₹645.96 crore via OFS. The minimum lot size for an application was 195 shares or ₹14,820.
Established in 2017, Ola Electric Mobility is a wholly-owned subsidiary of ANI Technologies, the parent entity of Ola Cabs. The company intends to use capital raised from fresh equities for capital expenditure to be incurred by the subsidiary, OCT for the Ola Gigafactory project and repayment of indebtedness incurred by subsidiary, OET. A part of the capital will be used for investment into research and product development, funding organic growth initiatives, and general corporate purposes.
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