Get ready for an IPO doubleheader! This week, the Indian capital markets will witness the much-anticipated debuts of two high-profile companies: Ola Electric and Ceigall India.
SoftBank-backed electric vehicle (EV) pioneer Ola Electric is set to raise a whopping ₹6,145.56 crore through its IPO. The company, which has rapidly captured a significant market share in the burgeoning Indian EV space, will offer shares in the price band of ₹72-76.
Meanwhile, infrastructure construction specialist Ceigall India is also tapping the public markets with a ₹617.69 crore IPO. Renowned for its expertise in complex infrastructure projects, the company aims to leverage the IPO proceeds for expansion and growth.
As these two diverse sectors vie for investor attention, observing market response and the overall impact on the IPO landscape will be interesting.
OLA Electric Mobility Limited
| Offer Price | ₹72 – ₹76 per share |
| Face Value | ₹10 per share |
| Opening Date | 2 Aug 2024 |
| Closing Date | 6 Aug 2024 |
| Total Issue Size (in Shares) | 808,626,207 |
| Total Issue Size (in ₹) | ₹6,145.56 Cr |
| Issue Type | Book Built Issue IPO |
| Lot Size | 195 |
| Listing at | BSE, NSE |
The company, known for its aggressive expansion and innovative products, is offering shares in the price band of ₹72-76. The IPO, open from [start date] to [end date], will see a significant portion reserved for institutional investors (75%), with retail investors getting a relatively smaller pie (10%).
Objectives of the IPO
- Capital expenditure for expanding cell manufacturing capacity
- Repayment of debt
- Investment in research and product development
- Funding organic growth initiatives
- General corporate purposes
Grey Market Premium (GMP)
Even before the official price band was announced, the IPO commanded a hefty grey market premium of Rs 15, indicating strong investor interest. However, the company’s path to profitability is still unclear, with a net loss of ₹1,584.40 crore in FY24 despite a revenue surge of 88.42%.
Company Overview:
Ola Electric Mobility Limited, founded in 2017, has rapidly emerged as a dominant player in India’s burgeoning electric vehicle market. The company specializes in electric scooter manufacturing and has successfully launched multiple models, including the popular Ola S1 Pro.
Ola’s business model emphasizes technology and innovation. Its manufacturing facility, the Ola Futurefactory, produces electric scooters and key components like battery packs and motors. The company has adopted an omnichannel distribution strategy, combining online and offline sales through its extensive network of experience centers and service centers.
Financials:
Ola Electric reported a net loss of ₹1,584.40 crore for the financial year ended March 31, 2024, despite a revenue surge of 88.42% to ₹5,243.27 crore.
The company’s focus on rapid expansion and investments in research and development has led to significant losses, a common trend among early-stage tech companies. Despite significant investments in research and development and a wide product range, Ola Electric has been operating in the red.
SWOT Analysis of Ola Electric Mobility Limited
| STRENGTHS | WEAKNESSES |
|---|---|
| Strong brand recognition and early mover advantage Large-scale manufacturing capabilities Focus on technology and innovation Extensive distribution network | Negative profitability Reliance on a single product category (electric scooters) Supply chain challenges |
| OPPORTUNITIES | THREATS |
| Growing electric vehicle market in India Expansion into new vehicle segments Potential for battery technology leadership | Intense competition from both domestic and international players Government policies and regulations Economic downturns and consumer spending habits |
Ceigall India Limited
| Offer Price | ₹380 – ₹401 per share |
| Face Value | ₹5 per share |
| Opening Date | 1 Aug 2024 |
| Closing Date | 5 Aug 2024 |
| Total Issue Size (in Shares) | 1,41,74,840 |
| Total Issue Size (in ₹) | ₹617.69 Cr |
| Issue Type | Book Built Issue IPO |
| Lot Size | 65 Shares |
| Listing at | BSE, NSE |
The company is offering shares in a price band that has yet to be announced. The IPO is structured with a 50% allocation for qualified institutional buyers (QIBs), 15% for non-institutional investors, and 35% for retail investors. Employees are eligible for a discount of ₹38 per share. To participate, investors must apply for a minimum lot of 65 shares and in multiples of 37 thereafter.
Objectives of the IPO:
The net proceeds from the IPO will be utilized for two primary purposes
- Acquisition of equipment: To enhance operational efficiency and capacity.
- Debt repayment: To optimize the company’s capital structure and improve financial flexibility.
GMP (Grey Market Premium)
A strong indicator of investor interest, Ceigall India’s IPO is currently commanding a grey market premium (GMP) of ₹140. This suggests a positive market sentiment towards the company and anticipation of strong listing gains.
Company Overview
Ceigall India has established itself as a reliable player in the infrastructure construction sector. Focusing on specialized projects, the company has successfully executed numerous projects across India. The company’s expertise lies in delivering complex infrastructure solutions, including elevated corridors, bridges, flyovers, and tunnels.
As of March 31, 2024, Ceigall India had a robust order book of 1,488.17 lane kilometers, indicating a healthy pipeline of future projects. The company’s ability to secure and execute such projects is a testament to its strong execution capabilities and industry reputation.
Financials
The company has demonstrated impressive financial growth in recent years. Revenue surged by 46.92% in the financial year ended March 31, 2024.
Profit after tax (PAT) also increased significantly by 81.81% during the same period. These figures highlight the company’s ability to generate strong top-and bottom-line growth.
SWOT Analysis of Ceigall India Limited
| STRENGTHS | WEAKNESSES |
|---|---|
| Strong track record in executing complex infrastructure projects Geographical focus leading to operational efficiency Robust financial performance with consistent revenue and profit growth | Reliance on government contracts for revenue generation Exposure to project execution risks and delays Intense competition in the infrastructure sector |
| OPPORTUNITIES | THREATS |
| Growing government infrastructure spending Expansion into new geographical regions Diversification into complementary business areas | Economic slowdown impacting infrastructure spending Rising input costs and inflation Changes in government policies and regulations |
The Final Word
These two companies, representing different sectors, are tapping into the public market to fund their growth aspirations. While Ola Electric is a high-profile player in the burgeoning electric vehicle space, Ceigall India brings a wealth of experience in infrastructure construction.
Investors will watch these IPOs keenly for their performance and the broader market’s reaction. The success of these offerings could set the tone for the remainder of the year. Ultimately, the decision to invest in these IPOs should be based on a thorough evaluation of the companies’ fundamentals, market conditions, and individual risk tolerance.
*Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as recommendation or investment advice by Research & Ranking. We will not be liable for any losses that may occur. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL, and certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.
I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.
