Ola Electric Mobility IPO
Hell Yeah!
Government Focus & Initiatives:
- Strong government initiatives on EV mobility position the company to achieve record highs.
- The company is eligible for Production-Linked Incentive (PLI) schemes.
Market Leadership & Expansion:
- Ola Electric's substantial market share and scalable business model are highlighted.
- Identified key international automotive markets (Asia, LATAM, Africa) as growth opportunities.
R&D & Technology:
- In-house R&D and technology capabilities are strong.
- Company is developing vertically integrated manufacturing for EVs and component parts like cells.
Growth Prospects:
- Positioned as the market leader in the E2W segment with strong growth potential.
- Company's EV/sales ratio is considered high but justified by growth prospects.
Future Profitability:
- Dual focus on market expansion and participation in the PLI scheme can unlock long-term profitability.
- Potential for battery business to surpass scooter business due to surplus capacity deployment.
Wait and Watch!
Profitability Concerns:
- Despite growth, the company is loss-making, which raises caution.
- Heavy R&D investment may not yield immediate returns.
Valuation & Pricing:
- The company is valued at a high market cap/sales ratio, seen as richly priced.
- EV/sales ratio of 7.2 times for FY24 is noted as expensive, requiring cautious optimism.
Competitive Pressures:
- High competition in the EV market could lead to downward pricing pressure.
- The company faces high employee attrition, which may impact its operations.
Operational Efficiency:
- Margins are expected to improve post-integration of in-house cell production, but this is still speculative.
- The company needs more time to turn profitable and eliminate losses.
Investment Phase Risks:
- The company is in an investment phase, reporting net losses and negative cash flows.
- Need to monitor if these investments will eventually lead to profitability.
No No No!
Financial Performance:
- The company has reported losses for the last three fiscal years, raising concerns about its financial health.
- Despite revenue growth, profitability remains elusive.
High Competition:
- Potential for downward pricing pressure due to intense competition in the market.
- High employee attrition rate might destabilize the company.
Valuation Concerns:
- Rich valuation and expensive EV/sales ratio could be overoptimistic, making the IPO risky.