Ola Electric's IPO price out! How does it stack up against listed peers?

Ola Electric, the market leader in the e-scooter segment, has set a price band of Rs 72-76 per share for its Rs 6,146-crore initial public offering (IPO). The IPO comprises fresh fund raise of Rs 5,500 crore and secondary share sale of just Rs 646 crore. At the top-end, Ola is valued at Rs 33,522 crore ($4 billion) on a post-diluted basis —down from $7-8 billion it was targeting when it first filed its offer document in December. The Softbank-backed company had also pruned the secondary share sale component from Rs 724 crore.

If the IPO is successful, Ola will become the first electric two-wheeler (E2W)-to- manufacturer to list on the Dalal Street. Most of the listed peers are primarily internal combustion engine (ICE) makers. Nonetheless, it is important to see how Bengaluru-based firm stacks up against them.

As far as market cap is concerned, Ola will be the smallest among well-established names like Bajaj Auto, Eicher Motors, TVS Motors and Hero MotoCorp. Its 2023-24 revenues from operations at Rs 5,010 crore is also a fraction of these players. Ola reported a net loss in FY24 and was even loss-making at the operating profit level. The company has been burning cash, but has managed to improve its free cash flows loss margin to -31 per cent in FY24. Due to the cash burn, Ola has moved from net cash positive in FY22 to net debt in FY24.

Meanwhile, most other peers have healthy profitability track record and enjoy Ebitda margin between 14 per cent and 33 per cent.

However, if the future of the 2W industry is to be electric, Ola has a head start over the competition. With close to 3.3 lakh deliveries in FY24, Ola had a market share of 35 per cent — more than the combined market share of listed peers.

According to Redseer, E2W penetration in India is expected to expand from approximately 5.4 per cent of domestic 2W registrations in FY24 to 41-56 per cent of domestic 2W sales volume by FY28. The Indian E2W industry is expected to grow at a CAGR of 11 per cent to reach a size of $35 billion (Rs 2.8 trillion) to $45 billion (Rs 3.6 trillion) in FY28.