OLA Electric IPO Review | Share Market Latest IPO Analysis

Pushkar Raj Thakur: Stock Market Educator 📈

3 Aug 202414:16

Summary

TLDRThe video script discusses the IPO of Ola Electric, a company that has been making losses despite increasing revenues. Influencers on the internet are advising against investing in this IPO due to its high valuation and rapid expansion costs. However, retail subscription has already surpassed expectations on the first day, indicating a possible conflict between expert advice and public interest. The script also covers the company's vertical integration strategy, subsidy impacts, and competition in the electric vehicle market, urging viewers to make informed decisions by considering all aspects before investing.

Takeaways

🚀 Ola Electric's IPO has generated significant buzz, with influencers advising against investing due to concerns of potential loss.
📈 Despite warnings, retail subscription within the first day of the IPO has exceeded expectations, reaching 1.5 times the retail category.
🏢 Ola Electric was established in 2017 and is now seeking a valuation of around 6000-6500 crores, despite not yet being profitable.
📊 The company has shown increasing revenue from 373 crores in 2022 to over 5000 crores in 2024, but also increasing losses.
🔋 Losses are attributed to rapid expansion and investment in production capacity and facilities.
💡 The founder, Mr. Bhavish Aggarwal, has a significant personal investment in the company, which may influence perceptions of the company's value.
🛠️ Ola Electric aims for vertical integration, producing everything from tires to batteries in-house to increase profit margins.
🔄 The company has a growing network of experience centers and service centers, indicating a focus on customer reach and after-sales service.
🚗 There is a comparison with Tesla in the electric vehicle market, and competition is intensifying with new entrants and established players.
💰 Government subsidies have played a role in the growth of electric vehicles, but there is a challenge as subsidies are decreasing, affecting sales and pricing.
📉 Investors are cautioned about the high valuation and the potential for the market not to meet expectations, suggesting that exceptional returns are unlikely.

Q & A

What is the main topic of the video script discussing?
-The main topic of the video script is discussing the IPO of Ola Electric and the various aspects related to it, including the company's performance, market response, and advice on whether or not to invest in the IPO.
What year did Ola Electric start its operations?
-Ola Electric started its operations in 2017.
How has Ola Electric's revenue trend been from 2022 to 2024 according to the script?
-Ola Electric's revenue has been increasing, with 373 crores in 2022, jumping to 2631 crores in 2023, and reaching 5100 crores in 2024.
What is the concern regarding the losses of Ola Electric mentioned in the script?
-The concern is that despite increasing revenue, Ola Electric has been making significant losses, which have been growing from 784 crores in the first year to over 1580 crores in 2024.
What is the reason behind the continuous losses of Ola Electric as discussed in the script?
-The losses are due to the company's rapid expansion of its facilities and production capacity, which requires substantial capital investment.
What is the role of subsidies in the electric vehicle market as discussed in the script?
-Subsidies play a significant role in the electric vehicle market by making electric vehicles more affordable for consumers, thus boosting sales and adoption.
How does the script describe the competition in the electric vehicle market?
-The script describes the competition in the electric vehicle market as increasing, with many new companies entering the segment and offering a variety of designs and performance options.
What is the significance of vertical integration for Ola Electric as per the script?
-Vertical integration is significant for Ola Electric as it allows the company to manufacture everything from a tire to a battery in-house, which can potentially increase profit margins.
What is the 'Moo O' operating system mentioned in the script and why is it important?
-The 'Moo O' operating system is a proprietary software developed by Ola Electric. It is important as it represents the company's move towards vertical integration and control over its technology ecosystem.
What are the dates for the Ola Electric IPO as mentioned in the script?
-The Ola Electric IPO starts on the second of August and is open for subscription until the sixth of August.
What is the price range for the Ola Electric IPO as discussed in the script?
-The price range for the Ola Electric IPO is between 72 and 76 per share.

Outlines

00:00

🚀 IPO Controversy and Retail Subscription Surge

The video script discusses the recent IPO of Ola Electric, which has been met with controversy and skepticism from influencers advising against investing. Despite this, retail investors have shown strong interest, with subscriptions exceeding 150 times on the first day. The company, founded in 2017, has not yet turned a profit, but its revenue has been growing steadily. The founder, Bhavish Aggarwal, has a significant personal investment in the company, which has also faced challenges with product delivery and quality issues. The script also compares Ola Electric's market strategy to that of Tesla, highlighting the competitive landscape in the electric vehicle market.

05:00

🛑 Market Dynamics and Vertical Integration Strategy

This paragraph delves into the market dynamics affecting Ola Electric, including the rising costs of petrol and the government's subsidies for electric vehicles, which have increased the demand for electric scooters. The company's vertical integration strategy is highlighted, where it aims to manufacture all components in-house, from tires to batteries, to increase profitability. The script also mentions the growth in Ola Electric's asset base and the challenges posed by decreasing subsidies and increasing competition in the electric vehicle segment.

10:03

📈 IPO Details, Financials, and Investment Considerations

The final paragraph provides specific details about the IPO, including the dates, lot size, and price range. It emphasizes the strong retail subscription and the need for investors to consider the upper band for application. The script outlines the company's financial growth, asset expansion, and the use of IPO proceeds for the electric factory and corporate purposes. It also advises investors to make informed decisions based on the subscription status, valuation concerns, and the potential for growth or loss post-IPO.

Mindmap

Keywords

💡IPO

An Initial Public Offering (IPO) is the first sale of stock by a company to the public. In the video, Ola Electric's IPO is the central topic, with discussions around its valuation, subscription rates, and the potential risks and rewards for investors considering investing in this IPO.

💡Influencers

Influencers are individuals who have the power to affect the purchasing decisions of others because of their authority or influence due to their position in social media. The script mentions influencers discouraging people from investing in the Ola Electric IPO, which is a key point in the narrative surrounding the public perception of the IPO.

💡Retail Investors

Retail investors are individual investors who buy and sell securities for their own account, rather than for those of others. The script discusses the behavior of retail investors in the context of the Ola Electric IPO, noting that despite warnings, there has been significant subscription to the IPO on the first day itself.

💡Valuation

Valuation refers to the process and technique of determining the value of a business or security. The video script discusses the high valuation of Ola Electric at the time of its IPO and the implications of such a high valuation for potential investors.

💡Vertical Integration

Vertical integration is a business strategy where a company owns or controls several stages of its supply chain to minimize costs and maximize control over the process. The script mentions Ola Electric's vertical integration as a strategic advantage, as they produce components like batteries themselves, which can increase profit margins.

💡Revenue

Revenue refers to the total amount of money received by a company from its business activities before any expenses are deducted. The script provides figures of Ola Electric's revenue growth over the years, indicating the company's financial performance and potential for future growth.

💡Losses

Losses in a business context refer to the amount by which expenditure exceeds income, resulting in a negative financial outcome. The script highlights the losses incurred by Ola Electric, which is a critical consideration for potential investors evaluating the company's financial health.

💡Electric Vehicles (EVs)

Electric Vehicles are vehicles that use electric motors and energy stored in batteries or other devices to power themselves. The video discusses the growing preference for electric vehicles among consumers and the competitive landscape in the EV market, with Ola Electric being a significant player.

💡Government Subsidies

Government subsidies are financial assistance provided by the government to individuals or businesses to support certain economic activities. The script mentions the subsidies provided by the government for electric vehicles, which have a direct impact on the pricing and affordability of Ola Electric's products.

💡Market Share

Market share is the portion of the total market for a particular product or service that is controlled by a particular company or brand. The script notes that Ola Electric has a significant market share in the electric scooter segment, which is an indicator of its competitive position.

💡Investment Decision

An investment decision is a choice made by an investor or a company about how to invest money to get a return. The script encourages viewers to make informed investment decisions regarding the Ola Electric IPO, taking into account various factors such as valuation, market trends, and company performance.

Highlights

The largest IPO of the year has arrived, Ola Electric's IPO, which many influencers are discouraging people from investing in, warning of potential loss.

Despite warnings, retail subscription on the first day of the IPO has already seen 1.5 times the subscription within the retail category.

The company started in 2017 and is now going public with a valuation of 33,000 crores, raising 6,000 to 14,500 crores.

The company is still making losses, with revenue increasing from 373 crores in 2022 to 5,100 crores in 2024, but losses also increasing.

Losses are due to rapid expansion of facilities and production capacity, requiring significant capital investment.

Founder Bhavish Aggarwal invested 200 million dollars in 2017 and has not yet seen profitability in Ola's cab services.

The company is vertically integrated, manufacturing everything from tires to batteries, aiming to increase profits.

Ola Electric has its own operating system called 'Mo', indicating a focus on software development.

The company has a large network of experience centers and service centers, with over 870 and 431 respectively.

Government subsidies have played a significant role in the growth of electric vehicles, including a 40% subsidy for electric scooters.

As subsidies decrease, the company faces challenges in maintaining sales and managing the impact on pricing.

Competition in the electric vehicle market is increasing, with new companies entering and posing a threat to Ola Electric's market share.

The IPO is open for subscription from the 2nd of August to the 6th, with a lot size of 195 and a price range between 72 and 76.

Retail investors are advised to apply for the upper band, and the minimum investment for one lot is approximately 92,660 rupees.

The company plans to use the IPO proceeds for the electric vehicle factory and to pay down some corporate debt.

The IPO includes fresh issue of 5,500 crores and an offer for sale of 645 crores, indicating the company's capital needs.

Investors are cautioned not to expect high returns or rapid growth from this IPO due to the high valuation.

The allotment status will be known on the 7th, and refunds will be issued to those not allotted on the 8th.

The final outcome of the IPO investment will be known on the 9th, with shares expected to list on the 11th.