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BACKGROUND

Ola electric is a major player in India's EV market, focusing on building vertically integrated technology and manufacturing capabilities for EVs and EV components, including cells. Ola Electric commands nearly a 35% market share in India's (E2W) market in FY24, Ola manufactures EVs and certain core EV components like battery packs, motors and vehicle frames. Ola has delivered seven products and additionally announced four new products

Objects and Details of the Issue:

The public issue consists of Offer For Sale aggregating upto Rs 646 Cr. and fresh issue up to Rs 5500 Cr. Company proposes to utilize the Net Proceeds towards:- (i) Capex to be incurred by Subsidiary OCT for cell manufacturing plant:- 1228 Cr. (ii) Repayment of the indebtedness incurred by Subsidiary OET:- 800 Cr. (iii) Investment into research and product development:- 1600 Cr. (iv) Expenditure to be incurred for organic growth initiatives:- 350 Cr. And General corporate purposes.

Investment Rationale:

* Pure EV player with a leadership position in the fast-growing Indian E2W market.

* Significant market opportunity.

* Scalable platform-based design and expansion of product portfolio.

* Develop own cell technology and strengthen in-house manufacturing capabilities.

* Beneficiary of PLI Schemes.

Valuation and Recommendation:

Ola electric is the leader of rapidly growing (E2W) market with a 35% share, but intense competition may limit profitability in the near term, potentially keeping the company loss-making. Meanwhile, Hero's recent investment in Ather Energy values the company at 3.2x FY24 sales, significantly lower than Ola's valuation of 6.9x. While Ola's market leadership, faster growth and investment in cell development productions we do believe Ola deserves premium valuations over Ather, Its current valuation appears high, so we recommend subscribing to the issue for long-term

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