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| Ola Electric’s IPO Debut: Shares Surge by 20%, Setting the Stage for India’s Electric Two-Wheeler Market Image credit: Ola Electric |
Ola Electric, the leading electric two-wheeler manufacturer in India, has solidified its dominance with a remarkable 46% market share. Since launching its first electric scooter in December 2021, the Bengaluru-based firm has sold over 330,000 units as of March 2024. Despite this success, the company has yet to turn a profit, reporting a net loss of ₹16 billion (approximately $200.5 million) and an EBITDA loss of ₹13 billion (around $162.8 million) on annual revenue of ₹50 billion (about $626.3 million) in its last financial year. Ola Electric is investing heavily in vertical integration to enhance quality, control supply, and reduce costs. The company is also focusing on developing its own battery cell technology and expanding manufacturing capabilities, with plans to increase capacity to 20GWh by the second quarter of 2026.
Ola Electric’s IPO Performance: A Strong Market Entry
Ola Electric made a significant impact on its public debut, with shares surging as much as 20%. This marks the largest listing among Indian firms in the past two years. The company’s shares opened at ₹76, the higher end of its IPO price range, and climbed to as high as ₹91.18 (approximately $1.1). This strong performance comes despite the IPO valuation being 26% lower than the $5.4 billion achieved in an October 2023 funding round and well below the initial target range of $6.5 billion to $8 billion. Currently, the stock is trading at ₹90, giving Ola Electric a market capitalization of $4.75 billion.
Growth Projections and Market Challenges
The electric vehicle market in India is set for significant expansion, with investment banking and research firm Macquarie predicting a gradual increase in the market share of electric two-wheelers. Macquarie estimates market penetration rates of 7%, 10%, 13%, and 16% for fiscal years 2025, 2026, 2027, and 2028, respectively. In contrast, Ola Electric's IPO prospectus projects a much more optimistic market share for electric two-wheelers, expecting the category to reach between 41% and 56% by fiscal year 2028. The Indian electric vehicle market has also experienced some consolidation, as evidenced by the Herfindahl-Hirschman Index (HHI), a measure of market concentration, rising to 2,810 in June 2024, up from 1,200-1,330 in fiscal years 2022-2023.
Impact of Government Policy on Electric Two-Wheelers
Recent reductions in government subsidies for electric two-wheelers have affected the sector's growth trajectory. Despite this, the market remains promising, with the Herfindahl-Hirschman Index (HHI) for electric two-wheelers now surpassing that of traditional internal combustion engine vehicles, indicating increasing market concentration and potential for growth.
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