Ola Electric IPO Subscription Update: What You Need to Know

The Ola Electric Mobility IPO has been generating quite a buzz and just recently, it was fully subscribed on the second day of bidding. This IPO, which aims to raise a whopping ₹6,145 crore, has shown interesting trends in various investor categories.

Among the different groups of investors, employees were the most enthusiastic, with their section being oversubscribed by nearly 9 times! Retail investors followed with a healthy subscription rate of 2.87 times, while non-institutional investors stood at 1.11 times. The qualified institutional buyers, however, lagged, with only 40% of their portion being subscribed.

On the first day of bidding, August 2, things didn’t look as promising, with the initial offer only seeing a subscription of 35%. This sluggish response hinted at a bit of hesitation from investors to jump into the electric two-wheeler market.

The IPO is priced within the range of ₹72 to ₹76 for each share, making it quite accessible for many. Prior to the opening of the subscription period, the company had secured ₹2,763 crore from anchor investors, giving them a bolster of confidence.

In terms of share allocation, 75% of the shares are earmarked for qualified institutional buyers, 15% for non-institutional investors, and the remaining 10% for retail investors.

Ola Electric is not just about creating electric vehicles; they also manufacture crucial components like motors, battery packs, and vehicle chassis. They are aiming to take advantage of the massive push towards electric vehicles in India and plan to expand their offerings internationally, starting with their popular Ola S1 Pro.

Analysts are optimistic about the company’s future, especially with the expanding market for EVs, where current penetration for electric scooters is just about 15%. They suggest that investors should consider subscribing to the IPO but do so with a general sense of caution, as Ola still faces challenges like ongoing losses and a heavy reliance on government support.

In addition to a fresh issuance of shares, the Ola Electric IPO includes an offer for sale of around 8.49 crore equity shares by both investors and promoters, including a significant sell-off by founder Bhavish Aggarwal.

These funds will primarily be used to reduce debt, support growth initiatives, and enhance research and product development. The company also plans to invest in expanding its manufacturing capacity.

The grey market premium currently stands at ₹2.50, suggesting that shares may open slightly higher than the IPO price. If these trends continue, the estimated listing price could reach around ₹78.5, pretty close to the higher end of the IPO price band.