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Shares of Ola Electric jumped on its debut on the Indian stock market, as investors bought into the first domestic offering from a maker of fully battery-powered vehicles, despite a week of global volatility for stocks.
The electric scooter maker, backed by Japan’s SoVscekBank and Singapore’s Temasek investment fund, listed $655 million in new shares and dumped about $77 million of existing investors’ shares in India’s biggest initial public offering so far this year. The timing came amid turmoil in global markets over fears of a U.S. recession and rising interest rates in Japan.
Ola Electric rose 20 percent in Mumbai trading on Friday. It saw anchor investments from firms including Nomura, Franklin Templeton, Fidelity and major Indian mutual funds, attracting bids 4.3 times the number of shares on offer, 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 $4 billion, in a bid to attract investors, many of whom had scorned unprofitable Indian startups.
“EV has been a hot topic for a long time,” said Varun Baxi, an analyst at brokerage firm Nirmal Bang. “The anchor book looked impressive.”
At a listing ceremony at the National Stock Exchange in Mumbai, Ola Electric co-founder and chairman Bhavish Aggarwal said the company has “created a new industry in India and led the electric vehicle revolution.”
“We’ve been written off since day one,” he added. “We’ve fought off the naysayers and the naysayers to build something we can all be proud of… our destination is still far away.”
Ola Electric’s listing is part of an expected blockbuster year for Indian IPOs, as domestic investors flock to the stock like never before. Hyundai Motors’ local arm, as well as takeout and grocery app Swiggy, are set to collectively raise more than $4 billion in public debuts.
The move also marks a new milestone for a company that only started shipping its first electric scooters in 2021, as it has aggressively expanded to become the market leader in India, with a share of more than a third of all electric scooter sales.
The Indian government is pushing for wider adoption of electric vehicles in a country where only 5 percent 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 in recent months as some government subsidies have been cut.
“They are gaining market share,” said Ravi Gupta, an auto analyst at InCred Capital in Mumbai, of Ola Electric. But “the dynamics of the sector remain under pressure.”
Aggarwal’s energetic image and determination to build India’s nascent electric vehicle industry have drawn comparisons to Elon Musk. He has dismissed criticism of his company’s work-intensive culture, which has been blamed for an annual attrition rate of nearly 50 percent.
“I’m not here to make friends,” he recently told the Financial Times. “People have to come here with fire in them.”
Ola Electric plans to use the IPO funds to invest in a battery factory in southern India, pay down debt and fund research and development.
Some analysts are sceptical about the company’s prospects, given its ongoing losses, which widened 8% in the last financial year to 15.8 billion rupees ($188 million), despite a 90% increase in revenue.
Last week, Mihir Manek of Aditya Birla Capital recommended avoiding the Ola Electric deal, calling it “expensive on all fronts” with a “rich” valuation of 6.5 times annual sales, “leaving little on the table for investors.”
Manek added: “It’s still a very young company in such a large and capital-intensive industry.”
