Shares of Ola Electric Mobility rose 20% in their Mumbai stock market debut on Friday, valuing the company at $4.8 billion, as investors bet on the rise of electric vehicles in the world’s largest two-wheeler market.
The company’s shares were trading at its initial public offering (IPO) price of Rs 76 before rising to Rs 91.20 amid a broader market that was up 1%.
Ola Electric’s $734 million initial public offering is India’s largest IPO of 2024. The company is a leading player in a country where electric vehicle adoption is still low but growing as Prime Minister Narendra Modi’s government promotes clean energy.
Analysts said improving stock market sentiment also helped boost earnings. The Nifty 50 has rebounded about 1.3% in four sessions after falling 2.7% on Monday amid concerns about a U.S. recession.
“Despite demand coming in well below market expectations, Ola stock has been priced well above expectations, which can be attributed to market sentiment,” said Prashanth Tapse, senior vice president, research, Mehta Equities.
With a 39 percent market share as of July, Ola Electric dominates electric scooter sales in India. It launched its first model just three years ago.
Analysts say investors are also bullish on Ola Electric’s foray into the motorcycle market, which accounts for two-thirds of India’s two-wheeler market. The company is expected to launch its range of electric motorcycles next week.
“The flat start to the session seems to have encouraged investors who were not allotted shares in the IPO to come in and they are clearly optimistic about the Ola bike launch,” said Varun Baxi, chief analyst at Nirmal Bang Institutional Equities.
However, while Ola’s revenues have soared, it has yet to turn a profit. In the year to the end of March, the company’s sales rose 90% year-on-year, but losses deepened by 8%.
“Our focus will be on building profitable growth for investors so that they also feel that there is a long-term path to profitability,” Ola Electric founder Bhavish Aggarwal told CNBC-TV18 on Friday after the NSE bell rang.
The company, which will receive about $660 million from the IPO, plans to invest most of the funds in research and development and its battery cell manufacturing facility.
Ola Electric attributes its profitability to producing its own battery cells for its scooters, which should make them more affordable. The goal is to have commercial production of battery cells by early 2025.
“Ola Electric is in a very aggressive growth phase… where we are investing in future growth,” Aggarwal said.
(This story has not been edited by NDTV staff and is auto-generated from a feed.)
