Ola Electric is currently the only pure EV manufacturer listed on the Indian stock market.
While its IPO was a success on the street, both in terms of oversubscription and listing gains, investors remain divided on its long-term prospects.
In this article, we will be doing a fundamental analysis of Ola Electric and assess the long-term growth potential of its share price with the help of a stock market advisory.
About Ola Electric
Ola Electric Mobility Private Limited was incorporated in February 2017 in Bengaluru, Karnataka and is primarily into the business of manufacturing electric two-wheelers and core EV components like battery cells, motors, etc.
All of its manufacturing activities for electric two-wheeler (E2W) assembly and core component manufacturing take place at the Ola Gigafactory in Tamil Nadu.
In the E2W category, the company has increased its market share from 5.70% in FY22 to 34.80% at the end of FY24, according to the company’s IPO documents.
According to Tracxn, Ola Electric has raised nearly $1 billion in multiple funding rounds from different investors including Softbank, Ratan Tata, Tiger Global in combination of fresh equity infusion and debt. Before the IPO, the company raised funds at an enterprise valuation of $5.49 billion.
Ola Electric Business Overview
As mentioned earlier, Ola Electric is a pure EV player in India with manufacturing capabilities for E2W, EV components including cells, motor, vehicle frames, etc.
Currently, it sells six variants of Ola scooters. In FY24, the company sold close to 3.3 lakh electric two-wheelers, up from nearly 1,56,251 units in FY23.
It manages its business operations primarily through two subsidiaries- Ola Electric Technologies Private Limited and Ola Cell Technologies Private Limited.
Ola Electric Technologies Private Limited is engaged in the business of providing services across the electric value chain and manufacture and supply of electric vehicles.
While, Ola Cell Technologies Private Limited is engaged in the business of manufacturing, processing, assembling, export, selling, repairing, and distribution of cells and battery packs.
The company is constructing the Ola Future Factory for EV manufacturing and the Ola Gigafactory for cell manufacturing, thereby creating an EV hub in Tamil Nadu.
Ola Electric Management Profile
Bhavish Aggarwal has been the founder, Chairman, and Managing Director at Ola Electric since its inception.
Ramkripa Ananthan is the Head of Vehicle Design and has been with the company since July 2022. She holds a B.Tech in Engineering (Mechanical) from BITS, Pilani, and an M.Tech in Industrial Design from IIT Bombay. Earlier, she worked with Mahindra & Mahindra and Thermax.
Samraj Jabez Dhinagar is the Head- Vehicle Engineering and joined the company in February 2022. He is responsible for overseeing the complete vehicle development lifecycle. Samraj holds a master’s degree in automobile engineering from Anna University and a Phd from IIT Madras. Prior, he was associated with TVS Motors.
Shaun William Calvert is the Chief Operations Officer and joined the company on March 1st, 2023. He is responsible for business operational activities and oversees Ola Future Factory.
Hyun Shik Park is the Chief Operations Officer of Ola Cell Technologies and joined the company in August 2023. He is in-charge of the Ola Gigafactory operations to ensure mass-production of cells and battery packages, His term in the office ends on August 16, 2027.
Harish Abichandani is the company’s Chief Financial Officer. He joined the company on December 6, 2023. He oversees our company’s financial strategy and ensures it aligns with overall business objectives. Harish is a chartered accountant by profession and earlier was associated with Tata Communications.
Ola Electric Shareholding Pattern
After the IPO and as per the shareholding pattern filed by the company on 8 August 2024, Bhavish Aggarwal holds a 30.02% stake in the company, while another promoter group company holds a 6.76% stake.
The public shareholding of the company is 56.81%, and employees make up 6.41% of the company.
Ola Electric Financials
Revenue
In the last three years, the revenue of the company has grown at a mind-boggling rate of 136% per annum.
For Q1FY24, the company reported revenue from operations at ₹1,644 crores, up from ₹1,243 crores in Q1FY23. The company earns the majority of its revenue from its automotive business.
Source: RHP
EBITDA
The company continues to make losses from its operations, which means it is spending more than what it is earning.
Source: RHP
In FY24, the losses of the company swelled to ₹1,584.4 crores from ₹784.1 crores in FY22.
Valuations
Since the company is loss making since its inception, the normal valuation metrics like price to book, price to equity, and price earnings growth could not be applied.
The only valuation metric that can be applied is price to sales ratio.
FY24 sales: ₹5,010 crores
Market cap ( as of 13th September 2024): ₹49,224 crores
Price-to-sales ratio = (Market cap / Sales)
The price-to-sales ratio approaches ten times. It was nearly six times the initial public offering price. The lower the ratio, the better it is.
The absence of any listed pure EV player makes it challenging to compare the valuation with its peers.
Should You Invest in Ola Electric
Ola Electric is building vertically integrated technology and manufacturing capabilities for EV and core EV components.
Its automotive business is not generating profit at operational levels. And, its cell manufacturing business is at the very initial stages of operations. The company is at a very early growth phase and yet to scale to its full potential, both in automotive and cell business.
Speaking about threats, the company is a beneficiary of the government FAME subsidy program for faster adoption of electric vehicles. The company has identified that reduction or elimination of such incentives can adversely affect customer demand and ability to achieve profitability or become less competitive.
Because the electric vehicle market is rapidly evolving and heavily reliant on R&D for new product development, the company is at risk of being eclipsed by deep-pocketed automotive companies if it reduces or stops innovating.
In conclusion, it’s a sunrise sector and if strategies and plans are executed well, Ola Electric can become one leading EV player in India, benefitting Ola Electric share price.
FAQs
Should I invest in Ola Electric Shares?
Ola Electric is a loss-making electric vehicle company that is benefitting massively from the increased adoption rate of electric vehicles in India. Compared to other listed automotive companies, Ola Electric is trading with expensive valuations.
Who are the competitors of Ola Electric?
Ather is the direct competitor of Ola Electric, along with other regular two wheeler automotive companies like Hero MotoCorp, TVS, Bajaj Auto.
Who owns Ola Electric?
Bhavish Aggarwal is the founder of Ola Electric and currently owns nearly 30% stake in the company. The remaining 57% stake is held by the public and close to about 6% shares are held by employees.
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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.
