Shares of Bhavish Aggarwal-led Ola Electric Mobility witnessed selling pressure on Monday, with the stock price falling nearly 5% in early trade as its one-month lock-in period for pre-listing shareholders expired today. With this, around 18.18 crore shares, representing 4% of Ola's outstanding equity, will become eligible for trading, as per a recent report by Nuvama Alternative and Quantitative Research.
As many as $21 billion pre-IPO shares of 38 companies will be free for secondary sales Between September 5, 2024, and November 30, 2024, as per the report. In September, the one-month lock-in period for four others stocks will also expire, including Ceigall India, Unicommerce Esolutions, Brainbees Solutions, Interarch Building Products, and Orient Technologies.
It is important to understand that the end of the lock-in period means that these additional shares will be eligible for trading in the secondary market. During the lock-in period, investors cannot liquidate the pre-IPO securities which they hold. However, it doesn’t mean that all these shares will necessarily be sold.
Extending losses for the second straight session, Ola Electric shares declined as much as 4.7% to hit a low of ₹104.5 on the BSE, while the market capitalisation dropped to ₹46,340 crore. In the first hour of trade so far, nearly 23 lakh shares changed hands over the counter as compared to two-week average volume of 45.36 lakh stocks.
Early today, the newly listed auto stock opened a tad higher at ₹109.70 against Friday’s closing price of ₹109.65 on the BSE. At the time of reporting, the counter was down 4.2% at ₹105.5 apiece.
At the current level, Ola shares trade 33% lower than its all-time high level of ₹157.53 touched on August 20, 2024. The stock touched its lowest level of ₹75.99 on its debut.
Despite the recent correction, Ola shares trade nearly 39% higher than its initial public offering price of ₹76 apiece. The stock made its market debut on August 9, 2024, hitting 20% upper circuit on its first day of trading. The share price of electric vehicle manufacturer more than doubled in just 7 trading sessions to touch its record high levels. However, the stock witnessed profit booking at ₹157.53 levels amid valuation concerns. The stock has corrected over 11% in a week and traded lower than 5-day and 20-day moving averages.
Post listing, HSBC initiated coverage with a ‘buy’ rating and a target price of ₹140 per share. The global brokerage opined that the stock is “worth investing in” due to sustained regulatory support, the company’s ability to reduce costs, and the favorable risk-reward ratio in its battery venture. However, the agency remained cautious about the slow pace of electric vehicle (EV) penetration in India, intense competition, an unpredictable regulatory environment, and risks related to battery manufacturing.
For the June quarter of FY25, the e-scooter maker posted a consolidated loss of ₹267 crore in the quarter ended June 30, 2023. Sequentially, the loss was down by 16% from ₹416 crore in March quarter of 2024. The EV maker posted “highest-ever” quarterly consolidated revenue from operations at ₹1,644 crore, up 32% from ₹1,243 crore in Q1 FY24. On a quarterly basis, the revenue slipped by 2.9% from ₹1,598 crore in Q4 FY24.
During the quarter, the adjusted gross margin stood at ₹377 crore, while margin stood at 21.94% of revenue, up 873 bps YoY. The automotive segment (E2W) posted improvement in EBITDA margin at (1.97)%, up by 632 basis points from (8.29)% in Q1 FY24.
Ola Electric raised ₹6,146 crore via IPO, which was the second-largest after LIC of India's ₹21,000 crore issue in May 2022. The issue comprised a fresh issue of ₹5,500 crore and an offer for sale (OFS) of ₹645.96 crore by promoters and existing shareholders.
Ola Electric Mobility, a wholly-owned subsidiary of ANI Technologies - the parent entity of Ola Cabs, 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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