Ola Electric - India's largest IPO in the last two years

Shares of Ola Electric Mobility Ltd rose in their debut on the Mumbai Stock Exchange on Friday, buoyed by strong investor demand amid widespread adoption of electric vehicles in the country, Bloomberg reports.

Shares of India's largest electric scooter maker rose as much as 20% (daily limit) above the public offering price of 76 rupees.

Backed by SoftBank Group Corp. and Tiger Global Management LLC, Ola's IPO raised about $733 million, making it the largest initial public offering in the country after the sale of shares in state-owned Life Insurance Corp. in 2022. Ola is also the first major listed vehicle manufacturer since the debut of Maruti Suzuki India Ltd. in 2003.

Friday's flat open has likely encouraged some investors to buy shares, Shifara Samsudeen, an analyst at LightStream Research, said as quoted by Bloomberg, noting: "While some investors remain concerned about the company's financial situation Ola Electric, those optimistic about its prospects bought shares".

New equity sales in India have attracted $6.5 billion since the start of this year, more than double the same period in 2023 but below the levels seen in 2021, according to data compiled by Bloomberg.

Ola's listing is a plus in the crowded IPO market in India. The company went ahead with its bid despite the turbulence seen in global markets earlier last week. The IPO attracted anchor investors, including funds linked to Nomura Holdings Inc., Fidelity International Ltd. and SBI Mutual Fund. The offer benefited from a demand 4.3 times higher than the securities offered for sale.

"Ola's debut indicates that sentiment remains strong for Indian IPOs, especially when we have many large-scale offerings underway and the market has overcome recent jitters," said Aditya Kondawar, vice president of Complete Circle Capital Pvt.

At the IPO price, Ola is valued at $4 billion.

Founded in 2017, the company also manufactures components for electric vehicles, such as batteries, motors and frames. It became a unicorn only two years later, without having delivered a single scooter. The company has also faced some problems, such as when its scooters were caught in a series of electric vehicle battery fires that occurred in India.

Ola has suffered losses and negative cash flows from operations since its inception, according to the listing documents. The company posted a loss of 15.8 billion rupees ($189 million) in the fiscal year ended March 31.

Ola to manufacture India's cheapest electric two-wheelers, benefiting from incentives. The company will be able to break even in the next two years, says Annamalai Jayaraj, analyst at Batlivala & Karani Securities Pvt. from Mumbai.

Ola's IPO was handled by Axis Capital, BofA Securities, BOB Capital Markets, Citigroup Global Markets India, Goldman Sachs (India) Securities, ICICI Securities, Kotak Mahindra Capital and SBI Capital Markets.