Top Reasons to Consider Investing in Ola IPO
As Ola Electric Mobility Limited takes the significant step of being listed on stock exchanges through its initial public offering (IPO), there is a considerable buzz among investors.
The IPO will open for subscription on 2nd August and close on 6th August. If you are looking for reasons to subscribe to this IPO, here are some of them.
1. Market Leadership
Ola Electric has a dominant presence in the Indian EV space and had the highest revenue of all Indian incorporated electric two-wheelers and original equipment manufacturers (OEMs) from electric two-wheeler sales in FY 2023. The company was India's largest electric two-wheeler (E2W) seller by number of units registered in Fiscal 2024, accounting for approximately 35% of the total E2W registrations in India for such a period.
As of March 31, 2024, the Ola FutureFactory is India's largest integrated and automated E2W manufacturing plant in terms of production capacity. Its network of experience centres was India's largest company-owned network of experience centres.
Source: RHP
2. Growth Potential
Ola Electric holds growth potential in the coming days primarily because of:
- India's emergence as a manufacturing powerhouse of EVs has made the country the second-largest and third-largest market for two-wheelers and four-wheelers.
- The rapid adoption of electric two-wheelers expected to reach approximately 5.4% of total two-wheeler registrations in India in FY24
- India’s favourable policy towards accelerating electrification of mobility led by improved EV penetration across vehicle segments
Source: RHP
3. Innovative Business Model
The company's business model is based on three vital scalable platforms, including:
R&D and technology platform with in-house design and development across EV technologies and components
Ola Electric's R&D technology platform consists of technologies that enable the development of an adaptable platform architecture that can be used to develop different EV models. This gives the company better control over product performance and cost and enables it to achieve a fast time to market.
Adaptable manufacturing and supply chain platform
The company's manufacturing and supply chain platform consists of a vertically integrated manufacturing ecosystem across core EV components like battery packs, motors, and vehicle frames. It's a resilient and common supply chain with a focus on co-location, localisation, and flexible assembly lines.
This platform, combined with the company's ability to scale its manufacturing capacity in coordination with its network of suppliers, helps it drive down costs and optimise capital expenditure on the development of its EVs.
D2C Omni channel distribution platform
The company's D2C omnichannel distribution platform comprises an integrated company-owned sales and service network, a charging network, and an online retail platform. The company can reach a broader customer base through this platform and maintain greater control over the customer experience.
This platform can be scaled to accommodate future EV models, enabling Ola Electric to achieve a faster time to market and optimise its investment in infrastructure.
Source: RHP
4. Technological Advancements
Technology is the backbone of Ola's business model. The company's R&D centres and BIC are staffed with engineers with qualifications in electrical, electronics, chemical, mining, automotive, mechanical, and engineering fields. They have automotive experience in vehicle product development, design, engineering, and manufacturing.
The company's commitment to technology and innovation is reflected in its pool of on-roll and off-roll employees dedicated to R&D across product development, vehicle and software engineering, vehicle design, and cell development, comprising 959 employees as of March 31, 2024.
Its in-house capabilities to develop EV technologies are driven by its focus on R&D, where the efforts are centred around five key technologies:
- Software
- Electronics
- Motor and drivetrain
- Cells and battery packs
- Manufacturing technology
Source: RHP
5. Experienced Leadership Team
A highly professional and experienced team supports Ola Electric. Its founder, Chairman and Managing Director Bhavish Aggarwal, is an entrepreneur who founded the company in 2010. Over the years, Bhavish has received several accolades such as:
- India 30 under 30 from Forbes India in 2014
- Entrepreneur of the Year from the Economic Times in 2017
- Top 100 Most Influential People by Time Magazine in 2018
Bhavish was also featured in the TIME100 Climate List in 2023 as one of the most innovative leaders globally. The company is also led by a Board of Directors with diverse expertise. In addition, many of its senior management have experience across a broad range of industries and functions and technology research centres, enabling them to effectively operate the business.
Source: RHP
Conclusion
While these are some of the reasons to consider investing in the Ola IPO, you must do your homework as an investor. See if the IPO fits your broader investment goals and whether you are comfortable taking the risks associated with the IPO. Seek professional help if in doubt, and go through the company’s red herring prospectus for a detailed overview.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read the full disclaimer here.
Investments in the securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI-prescribed Combined Risk Disclosure Document before investing. Brokerage will not exceed SEBI’s prescribed limit.
