E-scooter maker Ola Electric valuations hit $7 bn; up 75% over IPO price

The latest jump in Ola's stock price comes after it launched a new line of motorcycles and on bets that it will lower costs by using its own batteries

The country’s top e-scooter maker Ola Electric Mobility’s shares jumped another 20 per cent on Friday to end at Rs 133. The Softbank-backed firm is now valued at Rs 58,558 crore, or $7 billion. The latest valuation is 75 per cent above the $4 billion (Rs 33,522 crore) it sought in its Rs 6,146-crore initial public offering (IPO), largest to hit the domestic markets in over two years. Shares were priced at Rs 76 in the IPO, which was subscribed only just over four times.

The latest jump in Ola’s stock price comes after it launched a new line of motorcycles and on bets it will lower costs by using its own batteries.

The e-motorcycle launch is set to intensify competition in the world's second-largest two-wheeler market, where Ola Electric will faceoff with bigger rivals like Bajaj Auto, TVS Motor and Hero Motocorp.

Two-wheelers dominate Indian roads, with 18 million units sold last year.

 

Ola was valued at $5.4 billion in a September 2023 pre-IPO funding round. But the company slashed its valuation target to $4 billion for its IPO due to a correction in global tech companies and to attract participants to the stock offering. Some investors had sold shares at a loss in the IPO.

The e-scooter maker's plan to build an "all-important" battery and its efforts to make most of its EV parts in the country should attract investors looking to play the electrification theme in India, HSBC said in a note.

HSBC has a “Buy” rating on the shares and a price target of Rs 140, citing regulatory support and the company's ability to reduce costs.

“Our target price implies FY28E price/sales of 2.9x and an EV/Ebitda of 39x,” the brokerage said.

On Wednesday, Ola Electric reported a wider first-quarter loss, hurt by subsidy cuts. On Thursday, the company launched a new series of e-motorcycles, expanding into an untapped segment. It plans to equip its vehicles with its own batteries by this time next year.

EV adoption is rising in India, but slowly, due to concerns around vehicles' range, lack of sufficient charging infrastructure, and a low re-sale value.

Morgan Stanley said Ola Electric's motorcycle line addresses the "mass and premium" sides of the segment, noting that its close pricing to traditional motorcycles is likely to intensify competition.

Ola is also expected to be on the radar of ESG funds, as its Future factory is all-women with capacity for 20,000 employees.