Ola Electric: Rapid acceleration, but a journey paved with roadblocks
₹2,630.93 crore, with operating loss at ₹1,100 crore. In the first quarter of this financial year, the company’s operating loss was at ₹182 crore. Ola Electric is looking to raise ₹5,500 crore via a fresh issue of 95,191,195 equity shares in its IPO, targeting a valuation of $7-8 billion (about ₹62,000 crore) in early 2024.
This follows the ₹3,200 crore it raised in October through equity funding and debt in a round that valued the company at ₹44,000 crore (about $5.3 billion). Ola registered total revenue of ₹1,270 crore in the three months ended June, allowing for a conservative estimate of ₹4,000-4,500 crore for FY2024. Considering the ₹60,000-crore valuation Ola Electric is expecting from its IPO, the company appears to be assigning itself a price-to-sales ratio of 15 times.
In comparison, the valuation of ₹44,000 crore from the October funding round implied a valuation of 10 times the business’s value. This valuation seems rather steep, especially when compared against the more conservative valuations of profitable ICE giants. Market leaders Hero MotoCorp and TVS are valued in the 2-2.5x range, while Bajaj Auto sits at 4.5x.
While it’s true that Ola Electric is experiencing rapid growth in a thriving market, its valuation heavily depends on optimistic prospects. To be honest, these prospects raise some questions. As at several startups, the employee attrition rate at Ola Electric has been high, at 42.06% and 47.48% in the seven-month period ended 31 October (on an annualized basis) and in fiscal year 2023, respectively.
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