Ola Electric Shares Dip as One-Month Lock-in Period Ends, Anchor Investors Eligible to Trade 18.18 Crore Shares

Ola Electric Mobility Ltd. shares fell over 4% as the company’s one-month shareholder lock-in period ended, making 18.18 crore shares or 4% of its outstanding equity eligible for trading.

The electric two-wheeler maker’s stock slipped as much as 4.14% to an intraday low of Rs 105.1 on the BSE, while on the NSE, it was down 4.33% or Rs 4.75 at Rs 104.9. The shares later staged a recovery, rising 12.08% to touch a day-high of Rs 116.

Anchor Investors and Lock-in Period

Ola Electric had raised Rs 2,763.03 crore from anchor investors a day before its IPO opened for public subscription on August 2. The company allotted 36.35 crore shares to domestic and foreign institutions at Rs 76 per share, which was the upper price band for the public offer.

Regulations require that shares purchased by anchor investors are subject to a lock-in period, with 50% locked for 30 days and the remaining 50% for 90 days from the grant date. The one-month lock-in period for 50% of the anchor investor shares ended on Monday.

Ola Electric’s IPO and Listing

Ola Electric made its stock market debut on August 9, 2024, with a combination of a fresh issue of 723.7 million shares aggregating to Rs 5,500 crore and an offer for sale of 84.9 million shares aggregating to Rs 645.56 crore. The shares listed flat at Rs 75.99 on the BSE and Rs 76 on the NSE, against the issue price of Rs 76.

Post-listing, the stock rallied as much as 20% to hit the upper circuit at Rs 91.18 per share. Since its listing, Ola Electric shares have gained 20.25% against Sensex’s rise of 98.14%.

Financial Performance and Analyst Views

For the first quarter ended June 2024, Ola Electric reported a 32% YoY jump in revenue, but its loss widened to Rs 347 crore from Rs 267 crore in the corresponding quarter of the previous year.

Analysts have largely suggested avoiding the Ola Electric stock for the short term. Domestic brokerage firm Anand Rathi believes there is a 54% potential upside in the stock, with a target price of Rs 170. Global brokerage HSBC initiated coverage on Ola Electric with a price target of Rs 140.

Ola Electric’s Focus and Bhavish Aggarwal’s Views

Ola Electric, led by Bhavish Aggarwal, is focused on developing vertically integrated technology and production capabilities for EVs and EV components, including batteries. The company has approximately a 35% market share in India’s electric two-wheeler market in FY24.

Aggarwal believes incumbent two-wheeler players run the risk of cannibalising their ICE models and may end up burning a hole in their balance sheets as they build their electric mobility business. He argues that Ola is better-positioned due to its focus on profitable growth and is already at ‘break-even’ on an EBITDA level