Shares of Ola Electric Mobility surged 20% in its initial public offering in Mumbai on Friday, valuing the company at $4.8 billion as investors bet on rising adoption of electric vehicles in the world’s largest two-wheeler market.
The shares were trading close to their IPO price of Rs 76, but then rose to Rs 91.20 in a broader market that rose 1%.
Ola Electric’s $734 million IPO is India’s largest so far in 2024, making it the leading player in a country where electric vehicle adoption remains low but is growing as Prime Minister Narendra Modi’s government promotes clean energy.
Improving sentiment in the stock market also helped drive gains, analysts said. The Nifty 50 has gained about 1.3% in four sessions after falling 2.7% on Monday on concerns of a US recession.
“Despite demand being much below expectations, Ola traded much above expectations, which can be attributed to market sentiment,” said Prashanth Tapse, senior vice president, research, Mehta Equities.
With a market share of 39% in July, Ola Electric dominates electric scooter sales in India. The company launched its first model only three years ago.
Analysts said investors were also bullish on Ola Electric’s foray into motorcycles, which account for two-thirds of India’s two-wheeler market. The company is expected to launch its range of electric motorcycles next week.
“The flat opening seems to have encouraged investors who did not get shares in the IPO to step in. They seem to be optimistic about the launch of Ola’s motorcycle,” said Varun Baxi, chief analyst at Nirmal Bang Institutional Equities.
While Ola’s revenues have been rising, the company has yet to turn a profit. In the year to the end of March, the company’s sales grew 90% year-on-year, but losses widened by 8%.
“We are focused on creating profitable growth so that investors also feel that there is profitability in the long run,” Bhavish Aggarwal, founder of Ola Electric, told CNBC-TV18 on Friday after ringing the bell at the NSE bourses.
The company, which will receive about $660 million in IPO proceeds, plans to invest most of it in research and development and its battery cell manufacturing facility.
Ola Electric has built its profitability on manufacturing its own battery cells for its scooters, which should make them more affordable. The company is targeting commercial production of the battery cells in early 2025.
“Ola Electric is in a very aggressive growth phase… where we are investing for future growth,” Aggarwal said.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
