How is Ola Electric Mobility faring post its IPO?
Aug 16, 2024, 14:47 IST
The past few months at Ola Electric Mobility have been very eventful and happening. First came the company's IPO between August 2nd and 6th, looking to raise Rs 6,154 crore, which was oversubscribed around 4.45 times. The company listed on both BSE and NSE on August 9th, 2024, i.e. last Friday, and soared around 20% over its IPO price on its debut, trading at Rs 91.2 on NSE, up from its IPO price of Rs 76.
At present, the company's stock is trading at Rs 133.08 on NSE, skyrocketing the company's total market capitalization to Rs 58,699 crore, as of August 16th, 2024.
This also comes on the back of a slew of new electric motorbikes announced by the company yesterday, along with receiving a "buy" recommendation from brokerage house HSBC, which gave it a price target of Rs 140, and deemed it to be an opportunity "worth investing in", despite not being overly enthusiastic on India's EV penetration scene.
Per the report, "EV manufacturing costs might fall significantly by FY27/28, while that for ICE
scooters may go up due to emission standards, the cost to manufacture (BOM) an e2W may come down by Rs 30,000-40,000. This would make EVs competitive with traditional internal combustion engine (ICE) scooters even without subsidies, which we assume will fall from Rs 40,000 to Rs 10,000 over the same period".
However, as the broker cautioned, this would not be without its share of challenges, which include intense competition from their petrol and diesel driven counterparts, uncertain regulatory environment, in-house battery manufacturing risks, slow EV penetration in India, which happens to be the world's second-largest two wheeler market, and more.
Says Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, "Despite receiving demand well below the street's expectation, OLA listed well above street expectations, which can be attributed to market mood. Post listing, the short term view remain same due to weak financials and risk of negative cash flows in future and allotted investors should understand the risk before holding, which could adversely impact its consolidated financial condition post listing. Considering all the factors, we advise only risk taking investors to continue to hold with a minimum holding period of 2-3 years. If the stock is available well below its issue price, we recommend risk taking investors to accumulate on every dip, and to be part of 2-3 years of its journey. The long term story is intact, but we may see a lot of ups and downs in the short term".
New bikes in pipeline
Yesterday, Ola Electric announced the launch of Roadster electric motorcycle, which will be available in three variants, namely Roadster, Roadster X and Roadster Pro. In addition to this, the company also teased the launch of three of its upcoming bikes, namely Diamondhead, Adventure and Cruiser, which will start retailing at Rs 1,50,000 and are expected to be launched in October 2024. Here is a detailed list of the various variants on offer, and their ex-showroom price:
Source : Ola website
NA : Not Available
In addition to this, Bhavish Agrawal, the company's CEO, also announced that its 4680 Battery Cell, also popularly known as the Bharat Cell, will be integrated with all of Ola's own vehicles starting Q1FY26. The cell, he claims, will be the "5G of cells". Per Agrawal, it will offer 5x energy, and will also charge 1.5x faster.
Financials paint an inspiring picture
As of June 30th, 2024, the company's total income zoomed 34.32% year-on-year to touch Rs 1,718 crore. The same stood at Rs 1,671 crore in the last quarter (Q4FY24), and at Rs 1,279 crore during the year ago period (Q1FY24). However, the company's losses after taxes widened to Rs 347 crore in Q1FY25, up from Rs 267 crore in Q1FY24, largely on the back of the rollback of FAME (Faster Adoption and Manufacturing of Electric and Hybrid Vehicles in India) scheme and the subsequent subsidy cuts.
Per Agrawal, going ahead, the company's focus will be on improving its margins, and sustainability. However, there was a slight dip in its losses this quarter, as opposed to Rs 416 crore incurred by the company in Q4FY24. The company's share is currently witnessing a stellar run on the stock market, having rallied by over 74% in the last 5 days. At present, the company commands a 48.63% market share in the electric 2-wheeler market in India, up from 39% in Q4FY24, and 31% in Q1FY24.
Ola Electric also saw a spike in the quantum of deliveries it made during the quarter. From delivering 70,575 units in Q1FY24, the company delivered 1,25,198 units for the quarter ended June 30th, 2024. This is also an uptick from its deliveries made during Q4FY24, which stood at 1,25,198.
A point of concern, however, was the company's short-term operational efficiency, generally reflected by its EBITDA (Earnings before interest, taxes, depreciation, and amortization) margins. While it is no secret that Ola has a very long way to go before it can achieve sustained profitability, its EBITDA margins significantly shrunk from a negative of 7.4% in Q4FY24, to just 2% for the quarter ended June 30th, 2024.
Advertisement
At present, the company's stock is trading at Rs 133.08 on NSE, skyrocketing the company's total market capitalization to Rs 58,699 crore, as of August 16th, 2024.
This also comes on the back of a slew of new electric motorbikes announced by the company yesterday, along with receiving a "buy" recommendation from brokerage house HSBC, which gave it a price target of Rs 140, and deemed it to be an opportunity "worth investing in", despite not being overly enthusiastic on India's EV penetration scene.
Per the report, "EV manufacturing costs might fall significantly by FY27/28, while that for ICE
scooters may go up due to emission standards, the cost to manufacture (BOM) an e2W may come down by Rs 30,000-40,000. This would make EVs competitive with traditional internal combustion engine (ICE) scooters even without subsidies, which we assume will fall from Rs 40,000 to Rs 10,000 over the same period".
However, as the broker cautioned, this would not be without its share of challenges, which include intense competition from their petrol and diesel driven counterparts, uncertain regulatory environment, in-house battery manufacturing risks, slow EV penetration in India, which happens to be the world's second-largest two wheeler market, and more.
Advertisement
Says Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, "Despite receiving demand well below the street's expectation, OLA listed well above street expectations, which can be attributed to market mood. Post listing, the short term view remain same due to weak financials and risk of negative cash flows in future and allotted investors should understand the risk before holding, which could adversely impact its consolidated financial condition post listing. Considering all the factors, we advise only risk taking investors to continue to hold with a minimum holding period of 2-3 years. If the stock is available well below its issue price, we recommend risk taking investors to accumulate on every dip, and to be part of 2-3 years of its journey. The long term story is intact, but we may see a lot of ups and downs in the short term".
New bikes in pipeline
Yesterday, Ola Electric announced the launch of Roadster electric motorcycle, which will be available in three variants, namely Roadster, Roadster X and Roadster Pro. In addition to this, the company also teased the launch of three of its upcoming bikes, namely Diamondhead, Adventure and Cruiser, which will start retailing at Rs 1,50,000 and are expected to be launched in October 2024. Here is a detailed list of the various variants on offer, and their ex-showroom price:| Variant | Battery | Ex-Showroom price (In Rs) | Top Speed (km/h) | Maximum Range on single charge (in kms) | Maximum charging time (in hours, to reach 80%) |
| Roadster (Commuter Segment) | 3.5 kWh | 1,04,999 | 116 | 151 | 4.6 |
| 4.5 kWh | 1,19,999 | 126 | 190 | 5.9 | |
| 6 kWh | 1,39,999 | 126 | 248 | 7.9 | |
| Roadster X(Entry Level) | 2.5 kWh | 74,999 | 105 | 117 | 3.3 |
| 3.5 kWh | Rs 84,999 | 117 | 159 | 4.6 | |
| 4.5 kWh | Rs 99,999 | 124 | 200 | 5.9 | |
| Roadster Pro (Premium Segment) | 8 kWh | 1,99,999 | NA | NA | NA |
| 16 kWh | 2,49,999 | 194 | 579 | 7.5 |
Source : Ola website
NA : Not Available
In addition to this, Bhavish Agrawal, the company's CEO, also announced that its 4680 Battery Cell, also popularly known as the Bharat Cell, will be integrated with all of Ola's own vehicles starting Q1FY26. The cell, he claims, will be the "5G of cells". Per Agrawal, it will offer 5x energy, and will also charge 1.5x faster.
Financials paint an inspiring picture
As of June 30th, 2024, the company's total income zoomed 34.32% year-on-year to touch Rs 1,718 crore. The same stood at Rs 1,671 crore in the last quarter (Q4FY24), and at Rs 1,279 crore during the year ago period (Q1FY24). However, the company's losses after taxes widened to Rs 347 crore in Q1FY25, up from Rs 267 crore in Q1FY24, largely on the back of the rollback of FAME (Faster Adoption and Manufacturing of Electric and Hybrid Vehicles in India) scheme and the subsequent subsidy cuts.Advertisement
Per Agrawal, going ahead, the company's focus will be on improving its margins, and sustainability. However, there was a slight dip in its losses this quarter, as opposed to Rs 416 crore incurred by the company in Q4FY24. The company's share is currently witnessing a stellar run on the stock market, having rallied by over 74% in the last 5 days. At present, the company commands a 48.63% market share in the electric 2-wheeler market in India, up from 39% in Q4FY24, and 31% in Q1FY24.
Ola Electric also saw a spike in the quantum of deliveries it made during the quarter. From delivering 70,575 units in Q1FY24, the company delivered 1,25,198 units for the quarter ended June 30th, 2024. This is also an uptick from its deliveries made during Q4FY24, which stood at 1,25,198.
A point of concern, however, was the company's short-term operational efficiency, generally reflected by its EBITDA (Earnings before interest, taxes, depreciation, and amortization) margins. While it is no secret that Ola has a very long way to go before it can achieve sustained profitability, its EBITDA margins significantly shrunk from a negative of 7.4% in Q4FY24, to just 2% for the quarter ended June 30th, 2024.