Ola Electric Mobility Ltd. has been making headlines recently as its shares have surged nearly 90% in under two weeks, pushing the company’s market capitalization beyond $7 billion. This rapid rise has proven to be a validation of founder Bhavish Aggarwal’s decision to take the company public, despite initial scepticism regarding its valuation, as reported by Bloomberg.
The company’s initial public offering (IPO), which is the largest in India in the past two years, attracted widespread interest from investors. The surge in stock price has allowed Aggarwal to reach his target valuation earlier than anticipated, driven by robust demand in India’s thriving IPO market. Ola Electric, India’s largest e-scooter manufacturer, had initially moved forward with the IPO at a lower valuation due to investor concerns over its profitability.
„There is a serious belief among investors in India’s electric vehicle story,“ said Aishvarya Dadheech, Chief Investment Officer at Fident Asset Management Pvt, in an interview with Bloomberg. „The gush of domestic liquidity is driving investors to seek exposure to newer themes and investment ideas, and the EV sector is one of the biggest beneficiaries.“
Ola’s impressive stock market debut follows a trend of strong performances by other Indian tech companies. Zomato Ltd., a food delivery service and India’s first unicorn to go public, along with PB Fintech Ltd., an insurance marketplace operator, have both seen their shares more than double this year, becoming top performers in the consumer technology sector in emerging markets.
„Many of these companies were loss-making at the time of their debuts, but they were able to sustain investor interest only after prioritizing profitability, which is going to be important for Ola as well,“ said Mohit Nigam, a fund manager at Hem Securities Ltd.
Despite the positive momentum, Ola, backed by SoftBank Group Corp. and Tiger Global Management LLC, reported a widening of losses to 15.9 billion rupees ($189 million) for the financial year ending March 2024. On Wednesday morning, Ola’s stock showed volatility, fluctuating between gains and losses.
In conclusion, Ola Electric Mobility Ltd.’s recent success in the stock market is a testament to the growing interest in India’s electric vehicle sector and the potential for growth in the country’s IPO market. As the company continues to navigate challenges and work towards profitability, it will be interesting to see how it sustains investor interest and capitalizes on the momentum in the coming months. (With Inputs from Bloomberg)