Ola Electric Shares of Mobility surged 20% in their Mumbai debut on Friday, valuing the company at $4.8 billion as investors bet on wider adoption Electric cars in the world's largest two-wheeler market.
The shares traded at their initial public offering (IPO) price of Rs 76 and later rose to Rs 91.20 in the broader market, which rose 1%.
Ola Electric's $734 million IPO was India's largest in 2024. The company is a leading player in a country where electric vehicle adoption is still low but growing as Prime Minister Narendra Modi's government pushes clean energy.
Analysts said improved sentiment in the stock market also helped fuel the gains. The Nifty 50 has jumped about 1.3% in four sessions after falling 2.7% on Monday amid concerns about a U.S. recession.
“Despite the demand being significantly below market expectations, Ola shares were trading well above market expectations, which can be attributed to market sentiment,” said Prashant Taps, senior vice president of research at Mehta Equities.
As of July, Ola Electric is the leading electric scooter seller in India, having launched its first model just three years ago.
Analysts say investors are also bullish on Ola Electric's foray into motorcycles, which make up two-thirds of India's two-wheeler market. The company is expected to launch its line of electric motorcycles next week.
“The weak opening appears to have prompted investors who were not allotted shares in the IPO to step in and they appear to be optimistic about the Ola bike launch,” said Varun Baxi, lead analyst at Nirmal Bang Institutional Equities.
But while Ola's revenue has soared, it has yet to turn a profit. In the year to end-March, the company's sales grew 90% year-on-year, but losses widened 8%.
“We will focus on generating profitable growth so that investors also feel that there is a long-term path to profitability here,” Ola Electric founder Bhavish Aggarwal told CNBC-TV18 in an interview on Friday after the NSE opened trading.
The company, which will raise about $660 million from the IPO, plans to invest much of that money in research and development and its battery cell division.
Ola Electric has staked its profitability on manufacturing its own battery cells for its scooters, which should make them more affordable. The company plans to begin commercial production of battery cells by early 2025.
“Ola Electric is in a very aggressive growth phase… and we are investing in future growth,” Aggarwal said.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)