Ola Electric, an indigenous electric vehicle manufacturer, is gearing up to file its IPO papers this week, aiming to raise $700 million, propelling its valuation to $7-8 billion, a substantial leap from its previous funding rounds. The surge prompts questions about justification for this valuation escalation within a mere two months.
Experts assert that Ola Electric’s challenge lies in substantiating this valuation surge. “Ola Electric will have to demonstrate clear profitability and growth to justify a $2–3 billion increase in valuation in just two months,” market analysts emphasize.
Market watchers have been closely observing Ola’s after-sales issues and high attrition rates. Additionally, the competitive landscape in the EV two-wheeler space has intensified, with legacy players like TVS, Bajaj Auto, and Hero MotoCorp also exhibiting growth and adaptability.
Insights suggest that Ola might be factoring its electric car plans into the valuation. Investors keenly await evidence of the car plan’s viability and the product pipeline across different segments. “Investors would like to see the viability of the car plan and the product pipeline that Ola is working on across segments,” experts note.
The anticipated filing of Ola Electric’s Draft Red Herring Prospectus (DRHP) with SEBI, slightly delayed from the initial December 20 timeline, signals the company’s progression toward the IPO.
Ola Electric’s valuation journey showcases its exponential growth: from a $4.6 billion valuation in April 2022 to $5.4 billion by October 2023 after securing investments from SBI and Temasek.
Bhavish Aggarwal, the founder, retains a 37% stake, with significant shares held by key investors like SoftBank, Tiger Global, ANI Technologies, and others. However, recent reports hint at a reduction in sales and revenue forecasts for FY24, raising scrutiny over the company’s projections.
Despite selling over 2.4 lakh vehicles in 2023 and holding a substantial market share, Ola Electric has revised its sales and revenue forecasts. Investors eagerly await the launch of the anticipated electric car, which could significantly impact the company’s trajectory.
Aggarwal’s plan to delay the electric car launch until 2025 aligns with the company’s strategy to ensure product viability across segments. Ola Electric’s improving gross margin and a targeted EBITDA profitability by FY25 demonstrate the company’s pursuit of sustainable growth and financial stability.
