(Bloomberg) -- Ola Electric Mobility Ltd.’s shares rallied in their Mumbai debut on Friday, backed by strong investor demand amid growing adoption for electric vehicles in the country.
The shares of India’s biggest e-scooter maker closed 20% higher, the maximum limit allowed, at 91.20 rupees, over the initial public offering price of 76 rupees apiece.
Backed by SoftBank Group Corp. and Tiger Global Management LLC, Ola’s IPO raised about $733 million, the country’s largest since state-run Life Insurance Corp of India’s $2.7 billion share sale in 2022. It is also the first major auto manufacturer listing since Maruti Suzuki India Ltd.’s debut in 2003.
The flat opening probably encouraged some investors to buy shares, said Shifara Samsudeen, an analyst at LightStream Research. While some investors remain concerned over Ola Electric’s financials, those optimistic about the company’s prospects would have bought the shares, she added.
New share sales in the country have raised $6.5 billion so far this year, more than double the amount from the year-ago period but below levels seen in 2021, according to data compiled by Bloomberg.
Ola’s listing adds to India’s busy IPO market. The company went ahead with the offering despite the turbulence seen in global markets earlier this week. The IPO attracted anchor investors including funds linked to Nomura Holdings Inc., Fidelity International Ltd. and SBI Mutual Fund. The deal received 4.3 times demand.
“Ola’s debut indicates sentiment remains strong for Indian IPOs, especially when we have many large sized IPOs in the pipeline and the market has overcome the recent jitters,” Aditya Kondawar, vice president with Complete Circle Capital Pvt., said.
At the IPO price, Ola is valued at $4 billion. That’s a sharp discount for the loss-making firm seeking a potential valuation of as much as $7 billion before facing investor pushback, Bloomberg News reported earlier this year.
Founded in 2017, the company also makes EV components like battery packs, motors and vehicle frames. It became a unicorn just two years later without having shipped a single scooter. The company also encountered some early stumbles, such as when its scooters were caught up in a spate of EV battery fires across the country.
The company has been incurring losses and negative cash flows from operations since inception, according to its listing document. It posted a loss of 15.8 billion rupees ($189 million) for the year ended March 31.
Ola will be the lowest-cost maker of electric two-wheelers in India due to its scale that includes benefits from production-linked incentives and will be able to break even in the next couple years, Annamalai Jayaraj, an analyst with Batlivala & Karani Securities Pvt. in Mumbai, wrote in a note.
Axis Capital, BofA Securities, BOB Capital Markets, Citigroup Global Markets India, Goldman Sachs (India) Securities, ICICI Securities, Kotak Mahindra Capital, SBI Capital Markets are bookrunning lead managers for the IPO.
(Updates stock price at closing.)
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