Ola Electric launched its much-anticipated Initial Public Offering (IPO) on the 2nd of August, 2024 to raise funds for further growth and prospects in the Electric Vehicle (EV) sector. The offer for subscription of IPO is going to remain open till the 6th of August. On the first day of bidding, however, the subscription stood at just 35 per cent, indicating a very underwhelming response.
The Price Band and the Subscription Details for Ola
The price band for the IPO has been fixed at ₹72- ₹76 per share with a face value of ₹10 each. On the first day when the IPO was in the market, that is Friday, bids were received for 16.31 crore shares while the number of shares on offer was 46.51 crore shares. The firm is eying to mobilize ₹6,145.56 crore through this IPO, which includes ₹5,500 crore by way of fresh issuance and ₹645.56 crore through OFS. Existing shareholders, who include big investors, venture capitalists and promoters can sell their shares directly to the public under the OFS route.
Grey Market Premium and what it means
The grey market premium of Ola Electric shares has fallen ever since the starting day of the IPO. The GMP stood at a premium of ₹9 on Saturday, a fall when compared to the GMP on Friday that was ₹16. The GMP fell by this quantum following a stock market crash on Friday, when many investors squared off their profits in Indian, European, and US markets. GMP has a close indication of the premium at which shares are traded in the unofficial or grey market for the financial securities. It might be that the increased market volatility led to the stock market crash.
Subscription Details for the IPO
At the end of the first day of bidding, the public issue was subscribed to 0.35 times. The retail portion of the issue saw a subscription rate of 1.57 times, while the Non-Institutional Investors portion subscribed 0.20 times. It is mandated by the SEBI guidelines that every IPO should have a portion of the shares that has been set aside particularly for NIIs and this percentage should not be less than 15%.
Although the total response has been quite underwhelming, the IPO was fully subscribed in the retail segment, which acts as an indicator of sorts.
Future Pathway for Ola Electric
Despite the slow start that Ola Electric saw, there is an expectation that the IPO will catch up in the coming days, starting Monday. The sector remains optimistic based on a very encouraging regulatory environment at home and globally, growth in new infrastructure, higher capital expenditure targets, and newer models coming in. Besides this, EV has been getting a lot of attention with respect to climate targets also. Analysts believe that as the market stabilizes, activity and subscriptions could further go up for the IPO.
