Ola, the ride-hailing giant headquartered in Bengaluru, is moving closer to its much-anticipated initial public offering (IPO), with the company scheduling an extraordinary general meeting (EGM) for November 14, 2024. This is a major step forward as the company, led by Bhavish Aggarwal, prepares to join the public market.
In an official communication sent on November 9, 2024, the company announced that an EGM of ANI Technologies Private Limited, Ola’s parent company, will be held at 4:00 PM IST on November 14. This marks a significant milestone as the company aims to offer both a fresh issue and an offer for sale of equity shares by eligible existing shareholders. According to sources familiar with the matter, Ola is expected to file its draft red herring prospectus (DRHP) within the next three to four weeks.
Ola’s IPO Plans: What We Know So Far
This move follows the company’s success with Ola Electric, which already went public under Aggarwal’s leadership. The upcoming IPO would be another significant step for Aggarwal’s vision of expanding the company’s reach into various sectors, including financial services and electric logistics.
An email sent by Gagandeep Singh, the Office of the Company Secretary at Ola, confirmed the EGM, emphasizing that the company is evaluating the IPO process, subject to regulatory approvals and market conditions. The upcoming filing of the DRHP could provide more details about the financial structure of the IPO and how it will unfold.
What the Market Could Expect
As the company gets closer to its public debut, the road to an IPO for Ola isn’t without its hurdles. While the firm has posted impressive growth figures, with a 42% increase in revenue to Rs 2,799 crore for FY23, it has still faced challenges in reducing losses. In FY23, the company managed to cut its losses by nearly 50%, to Rs 772 crore. This trajectory is crucial as investors look for stability and long-term growth potential.
Here’s a snapshot of Ola’s recent financials:
| Metric | FY22 | FY23 |
|---|---|---|
| Revenue | Rs 1,974 Cr | Rs 2,799 Cr |
| Losses | Rs 1,480 Cr | Rs 772 Cr |
While these numbers are encouraging, Ola’s valuation has experienced volatility. As of August 2024, investment advisor Vanguard revised Ola’s valuation to approximately $2 billion, a far cry from the $7.3 billion valuation the company commanded in 2021. Notably, earlier in 2023, the company saw its valuation dip to $1.88 billion, reflecting the broader challenges within the market.
A Challenging Landscape for Ola Electric
Ola’s plans for its IPO come at a time when Ola Electric, one of its key subsidiaries, has faced some turbulence. After listing in August 2024, Ola Electric’s stock hit a low of Rs 72.6 per share, down from its initial listing price of Rs 76. The electric vehicle company had peaked at Rs 157.53 per share in mid-August, but this quick downturn serves as a reminder of the volatility that can accompany public market debuts.
Despite this, Aggarwal’s vision to transform the company into a diversified tech and mobility player is still very much intact. The rebranding of Ola Cabs to Ola Consumer is part of this broader shift, which includes the introduction of financial services, cloud kitchens, and electric logistics as integral parts of the business.
Investor Sentiment: Is the Market Ready?
Despite the recent setbacks in the electric vehicle space, Ola’s upcoming IPO might still find traction among investors. With Ola’s push into new sectors and its continued growth in the ride-hailing market, it has the potential to appeal to a wide range of investors. However, with volatility seen in other tech IPOs and the caution in the market due to external factors, the company may face an uphill battle in terms of market reception.
The company’s valuation in the current market climate will also play a significant role in shaping investor sentiment. While Ola has reduced its losses, it’s still recovering from the overall market slowdown, and its ability to effectively manage this transition to a public entity will be key.
For investors, the IPO will be more than just an opportunity to invest in a ride-hailing company. It will be a chance to buy into a broader vision that includes green technologies and diversified business models. But with the electric vehicle market showing signs of instability, potential investors will need to weigh the risks carefully.
Will Bhavish Aggarwal’s Vision Pay Off?
Ola’s foray into public markets could offer investors a unique proposition, considering Bhavish Aggarwal’s ambition to expand beyond ride-hailing. But the timing of the IPO will be critical. With market conditions remaining unpredictable and Ola Electric’s recent stock performance not offering much optimism, the company will need to be strategic in how it positions itself for a successful launch.
As of now, there’s no clear indication from the company on whether the IPO will be pushed back or if it will go ahead as planned. But one thing is for certain: Ola’s upcoming EGM and the filing of its DRHP will provide much-needed insight into what the public offering could look like.
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