Site icon Startup Fulcrum

Ola Electric plans a $7 billion IPO while the inspection is going on

Ola electric

Ola Electric plans a $7 billion IPO

Ola Electric is an indigenous electric vehicle manufacturer. The company is planning to file its IPO papers and is aiming to raise around $700 million. This valuation is around $7-8 billion and is a great leap from the last funding rounds.

This surge is raising questions about the justification for the valuation increase within two months. According to the experts, Ola Electric’s challenge is substantiating its valuation surge. The company will have to prove profitability and growth and justify a $2–3 billion increase in its valuation within two months.

Market watchers are pondering upon the company’s after-sales issues along with the high attrition rates. Along with this, the strong competitive landscape when it comes to the electric vehicle two-wheeler space has increased. Also, the strong competition involves legacy players such as TVS, Hero MotoCorp, etc., who have been exhibiting growth and better adaptability.

According to some insights, Ola might be considering its electric car plans for complete valuation. Investors are waiting for evidence of the car plan’s viability along with the product in various segments. The experts note, ‘The investors are willing to see the viability of the car plan along with the product pipeline of the company in different segments.’

The expected filing of the company Electric’s Draft Red Herring Prospectus with the SEBI is delayed from the timeline of around December 20. This is a signal about the company’s progression when it comes to the IPO.

The growth of Ola Electric

The valuation journey of Ola Electric shows a clear picture of its great growth, which is from $4.6 billion in valuation in 2022 to $5.4 billion in 2023. This valuation growth is after securing investments from investors SBI and Temasek.

The founder of the company, Bhavish Aggarwal, retains around 37% stake, along with great shares held by investors such as SoftBank, ANI Technologies, and many others. But the recent reports somehow are a hint as to the sales reduction and revenue forecasts for FY24. This raises scrutiny when it comes to Ola Electric’s projections.

The company sold more than 2.4 lakh vehicles in 2023 and has a great market share. However, it has revised its sales as well as revenue forecasts. Investors are waiting for the launch of its electric car, which can heavily affect the trajectory of the company.

Aggarwal is planning to delay the launch of the company’s electric car by 2025 to ensure the viability of the product in various segments. The company plans to improve gross margin along with EBITA profitability by FY25, which showcases its pursuit of financial stability along with sustainable growth.

Exit mobile version