By Nandan Mandayam
BENGALURU (Reuters) -Ola Electrical Mobility’s shares surged 20% on their Mumbai buying and selling debut on Friday, valuing the corporate at $4.8 billion, as traders guess on growing adoption of electrical fashions on this planet’s largest marketplace for two-wheelers.
The inventory had listed flat to its preliminary public providing (IPO) worth of 76 rupees earlier than rising to 91.20 rupees in a broader market that was up 1%.
Ola Electrical’s $734 million IPO, India’s greatest to date in 2024, drew about $1.8 billion in bids this week.
The corporate has turn into the largest participant in a rustic the place adoption of unpolluted autos continues to be low, however rising, as Prime Minister Narendra Modi’s authorities promotes clear power.
Enhancing sentiment within the inventory market additionally helped drive beneficial properties, analysts stated. The Nifty 50 has rebounded about 1.3% in 4 classes after plunging 2.7% on Monday amid U.S. recession worries.
“Despite receiving demand well below street expectation, Ola listed well above street expectations, which can be attributed to market mood,” stated Prashanth Tapse, senior vp of analysis at Mehta Equities.
With a 39% market share as of July, Ola Electrical dominates gross sales of electrical scooters in India, after launching its first mannequin simply three years in the past.
Its push into e-scooters has disrupted the market, forcing a pivot by incumbents resembling TVS, Hero MotoCorp and Bajaj Auto.
Analysts stated traders have been additionally optimistic about Ola Electrical’s foray into bikes, bigger two-wheelers that account for two-thirds of the Indian market. The corporate is predicted to launch its vary of electrical bikes subsequent week.
“The flat opening seems to have encouraged investors who weren’t allotted shares in the IPO to hop on, and they seem to be optimistic of Ola’s motorcycle launch,” stated Varun Baxi, analyst at Vintage Inventory Broking.
Nonetheless, whereas Ola’s revenues have soared, it’s but to show a revenue. Within the yr to the tip of March, the corporate’s gross sales rose 90% from the earlier yr, however its losses widened by 8%.
The corporate, which is able to get about $660 million from the IPO, is planning to take a position a lot of the proceeds on analysis and growth and its battery cell manufacturing unit.
Ola Electrical has pinned its profitability on manufacturing its personal battery cells for its scooters, which ought to make them extra reasonably priced. It’s concentrating on industrial manufacturing of the battery cells by early 2025.
($1 = 83.8875 Indian rupees)
