Anika Begay
By Nandan Mandayam
BENGALURU (Reuters) – Shares of Ola Electric Mobility rose 20% in their Mumbai stock exchange debut on Friday, valuing the company at $4.8 billion, as investors bet on the growing adoption of electric models in the world’s largest two-wheeler market.
The stock had remained unchanged from its initial public offering (IPO) price of Rs 76, before rising to Rs 91.20 in a broader market up 1%.
Ola Electric’s $734 million IPO, India’s largest so far in 2024, attracted about $1.8 billion in bids this week.
The company has become the largest operator in a country where adoption of clean vehicles is still low but growing as Prime Minister Narendra Modi’s government promotes clean energy.
Improved sentiment in the stock market also helped drive the gains, analysts said. The Nifty 50 has rebounded about 1.3% in four sessions after falling 2.7% on Monday amid worries about a U.S. recession.
“Despite demand being well below expectations, Ola has traded well above expectations, which can be attributed to market sentiment,” said Prashanth Tapse, senior vice president, research at Mehta Equities.
With a 39% market share in July, Ola Electric dominates electric scooter sales in India, after launching its first model just three years ago.
Its push into e-scooters has disrupted the market, forcing incumbents like TVS, Hero MotoCorp and Bajaj Auto to change course.
Analysts said investors were also bullish on Ola Electric’s foray into motorcycles, larger two-wheelers that account for two-thirds of the Indian market. The company is expected to launch its range of electric motorcycles next week.
“The flat opening seems to have encouraged investors who were not allotted shares in the IPO to come on board, and they seem optimistic about the launch of Ola motorcycle,” said Varun Baxi, analyst at Antique Stock Broking.
But while Ola’s revenues have skyrocketed, it has yet to turn a profit. In the year to the end of March, the company’s sales were up 90% from the previous year, but losses widened 8%.
The company, which will raise about $660 million from the IPO, plans to invest most of the proceeds in research and development and its battery cell manufacturing unit.
Ola Electric has based its profitability on producing its own battery cells for its scooters, which should make them more affordable. It is targeting commercial production of the battery cells by early 2025.
($1 = 83.8875 Indian rupees)
