Shares of newly listed Ola Electric Mobility continued gaining momentum on Monday, with the stock price hitting 20% upper circuit for the second straight session after its listing on the stock exchanges on August 9. The stock has risen 44% in two sessions against its initial public offering (IPO) price of ₹76, while its market capitalisation (m-cap) has surged by ₹14,737 crore to ₹48,259 crore during this period. Ahead of listing on the stock exchanges, the m-cap of Bhavish Aggarwal-led EV company stood at ₹33,522.31 crore.
On Monday, Ola Electric shares opened higher at ₹97.21 today, up 6.6% against Friday’s closing price of ₹91.18 on the BSE. Extending opening gains, the auto stock gained as much as 20% to hit its upper circuit of ₹109.41 amid strong volume as 1.6 crore shares changed hands over the counter.
The shares of Ola Electric made flat debut at ₹76 on the exchanges on Friday, at par with the issue price. Post listing, the stock gained 20% to settle on the first day of trade at ₹91.20 apiece.
Ola’s co-founder and CEO Aggarwal, who owns 132,39,60,029 shares in the company post IPO, is now worth ₹14,485.4 crore as shares of the firm surged to ₹109.41 apiece. India’s youngest billionaire sold 37,915,211 shares at ₹76 each via offer for sale in the IPO, raising ₹288 crore.
The ₹6,146 crore IPO of Ola, the second-largest after LIC of India's ₹21,000 crore issue in May 2022, had received a muted response from investors as the issue was subscribed 4.45 times. The quota reserved for qualified institutional buyers (QIBs) was booked 5.53 times, while the retail portion was subscribed 4.05 times, followed by 2.51% in the non-institutional investors (NIIs) segment. The quota for the employee was the most subscribed by 12.38 times. The EV manufacturer had reserved 75% of the issues for qualified institutional buyers, 15% for non-institutional bidders, and remaining 10% for retail investors.
The issue comprised a fresh issue of ₹5,500 crore and an offer for sale (OFS) of up to 8.49 crore shares by promoters and existing shareholders. At the upper end of the IPO price band of ₹72-76 per share, the company raised ₹645.96 crore via an offer for sale. The minimum lot size for an application was 195 shares or ₹14,820.
Ola Electric Mobility, a wholly-owned subsidiary of ANI Technologies - the parent entity of Ola Cabs, intends to use capital raised from fresh equities for capital expenditure to be incurred by the subsidiary, OCT for the Ola Gigafactory project and repayment of indebtedness incurred by subsidiary, OET. A part of the capital will be used for investment into research and product development, funding organic growth initiatives, and general corporate purposes.
Shivani Nyati, Head of Wealth, Swastika Investmart, in her post-listing view said that Ola needs to demonstrate a clear path to profitability and navigate the complexities of the EV market effectively. “Investors are suggested to exit and book a minor profit, but those who want to take risks may hold their position by keeping a stop loss below ₹70,” she said.
“Despite receiving demand well below street expectation, OLA listed well above street expectations can be attributed to market mood. Post listing the short-term view remains the same due to weak financials and risk of negative cash flows in future and allotted investors should understand the risk before holding which could adversely impact its consolidated financial condition post listing,” said Prashanth Tapse, Senior VP (Research), Mehta Equities.
“Considering all the factors, we advise only risk taking investors to continue to hold with a minimum holding period of 2-3 years,” said Tapse, adding that the long term story is intact but the stock may see a lot of ups and downs in the short term.
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