Ola Electric IPO: Share Price Closes At Rs. 91.2 On Listing Day

The Ola Electric IPO, which got listed earlier this morning, has given a huge surprise. Ola Electric Mobility made a subdued start, with the shares listing at their issue price of Rs 76 on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). However, the day’s trading ended on a high note, with the share price closing at Rs 91.2. This marked a 20% increase from the listing price, which resulted in the stock hitting the upper circuit.

Ola Electric’s IPO

The EV automaker’s IPO was met with considerable anticipation, but the initial listing was flat. Its shares opened at Rs 75.99 on the BSE and Rs 76 on the NSE, right at the issue price. Many experts highlighted that the flat listing reflected the market’s cautious optimism about the company.

However, as the day progressed, investor sentiment shifted positively. Following this, the stock price rallied by 17.77% to Rs 89.50 on the BSE. The shares eventually hit the upper circuit of 20%, reaching Rs 91.18 during intraday trading before closing at Rs 91.2.

What Are Investors Thinking?

The initial flat listing and the following rally reflect the mixed feelings investors have about Ola Electric. Shivani Nyati, Head of Wealth at Swastika Investmart, pointed out an important aspect of the Ola IPO. She stated that the flat listing, coupled with the IPO’s 4.45 times subscription, highlights the challenges Ola Electric faces in winning investor confidence.

She added that despite the company’s ambitious vision for the EV market, its current financial performance and consistent losses have tempered enthusiasm. Nyati noted that shares of Ola Electric were trading at a 3-4% discount in the grey markets leading up to the listing, which often indicates a negative opening.

Other experts have also suggested that while the rally is encouraging, investors should consider booking minor profits, especially given the financial uncertainties facing the company. For those willing to take risks, it has been advised that they should maintain a stop loss below Rs 70.

Prashanth Tapse, Senior VP (Research) at Mehta Equities, has also offered a similar outlook. He acknowledged that while the stock listed above expectations, the short-term risks remain significant due to Ola Electric’s weak financials and potential negative cash flows.

Ola Electric IPO Details

Ola Electric’s IPO was priced between Rs 72-76 per share, with a lot size of 195 shares. The public issue saw a decent response as it was subscribed 4.45 times amidst ongoing market volatility. The IPO comprised a fresh issue of 723,684,210 equity shares. Along with this, there was an offer for sale where promoters and existing investors offloaded 84,941,997 shares at a face value of Rs 10 each.

The company has stated that there will be a strategic use of the proceeds from the IPO. A portion of the funds will be directed towards repaying debt, which is expected to improve the company’s balance sheet. Another significant portion will be invested in expanding Ola Electric’s gigafactory.

Ola Electric has highlighted that it will be central to its plans for scaling up production and reducing manufacturing costs. Additionally, the company plans to use the funds to support organic growth initiatives and strengthen its research and product development efforts. Any remaining funds will be allocated for general corporate purposes, providing flexibility to manage operational needs.

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