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How Ola Electric fares against its peers in the industry
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3 min read | Updated on July 30, 2024, 14:43 IST
SUMMARY
Ola Electric’s ₹6,146-crore IPO has a price band of ₹72 to ₹76 per share. The company has seen improvements in its gross margins but has remained negative on an EBITDA level. While most of its competitors rely mostly on petrol two-wheelers and have higher revenues, Ola Electric has gotten a head start in the electric 2-wheeler market and has captured over 34% of the market share.
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Ola electric holds 34% market share in the E- 2 wheeler space
As India's largest electric scooter's initial public offering (IPO) gets underway, it will be interesting to see how Ola Electric compares with traditional two-wheeler giants listed in the market.
Ola Electric has filed a red herring prospectus to raise ₹6,146 crore. The company has set a price band of ₹72 to ₹76 per share and is conducting a primary fundraising of ₹5,500 crore and a secondary sale of ₹646 crore.
OLA's financials
According to the company’s documents, Ola Electric’s revenue from operations jumped from ₹2,630 crore in fiscal year 2022-23 (FY23) to ₹5,009.8 crore in fiscal year 2023-24 (FY24). This was achieved through a more than doubling of deliveries from 1.56 lakh to 3.3 lakh.
Being a fast-growing startup that will have large marketing spends, Ola remains unprofitable. However, the company’s loss at the earnings before interest, depreciation, taxes, and amortisation level narrowed from ₹1,197 crore in FY23 to ₹1,040 crore in FY24. Its gross profit, too, saw an improvement, rising from ₹60 crore to ₹630 crore.
Ola remains small in terms of revenue, deliveries as well as market capitalisation compared to competition, which sell petrol motorcycles and scooters in large volumes. Except for Eicher, all two-wheeler companies have ventured into the electric scooter space where Ola maintains a lead.
How does it fare with its peers
| Company | Revenue (₹ crore) | Deliveries (lakh) | Market Cap (₹ crore) | Revenue to Mcap |
|---|---|---|---|---|
| Ola Electric | 5,010 | 3.3 | 33,522 | 6.7 |
| Bajaj Auto | 44,870 | 56.2 | 2,65,042 | 5.9 |
| Hero Moto | 37,789 | 37.3 | 1,09,471 | 2.9 |
| TVS Motor | 11,910 | 40.5 | 1,19,100 | 10.0 |
| Eicher Motor | 16,536 | 9.1 | 1,37,318 | 8.3 |
Ola’s valuation, measured from a revenue-to-mcap standpoint, sits at 6.7, compared to the highest of 10 (for TVS Motors) and 2.9 (for Hero Moto).
However, Ola Electric has captured over 34% of the EV market share, which is higher than any of its peers in the segment.
With a global revolution in the automobile industry, more companies are pivoting to the EV market by introducing new EV models and variants.
The Indian electric 2-wheeler market is expected to grow at a compound annual growth rate (CAGR) of 11% and is expected to reach a market size of $35 billion. Growing markets like Africa, LATAM, and South East Asia provide significant avenues for the Indian 2-wheeler industry to expand.
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