The Ola quest to lock in a valuation 30% higher than the figure it achieved in an October fundraise will focus minds on how fast its rivals can gain ground.
SoftBank Group investors have supported the scooter manufacturer to spearhead the electric vehicle (EV) transition in a nation where two-wheelers outnumber four-wheelers by a wide margin (17 million scooters and motorbikes were sold in the fiscal year that ended in March, almost five times as many as cars). However, less than 5% of scooters run on batteries.
According to official data, the company, which is owned by founder and chairman Bhavish Aggarwal and his related entities to the tune of 45%, began delivering electric scooters to customers in 2021 and has since been steadily increasing its market share. As of March, the company accounted for over one-third of all unit sales.
The $32 billion Bajaj Auto (BAJA.NS), opens new tab more than doubled its share of the market to 11% during the year to March. TVS Motor (TVSM.NS), opens new tabexpects, opens new tab EVs will account for a quarter of the scooters it sells by 2027.
As a pure-EV company, loss-making Ola is not directly comparable. However, its rivals offer investors cheaper exposure to a fast-growing market and they are profitable too. Ola will generate $614 million revenue in the current financial year based on the annualised result for the first quarter. At $7 billion, the enterprise would be valued at 11 times its sales, nearly twice the multiple for Bajaj Auto and three times that of TVS.
Ola’s pure electric focus also makes it sensitive to sudden changes in a fast-evolving market. For instance, it cut prices of its cheapest scooter model in April to support demand after New Delhi reduced incentives for buyers. Meanwhile, its large peers are active in the $100 billion, opens new tab market for India-made motorbikes and scooter exports across Africa, Latin America and Southeast Asia that Ola is targeting.
Aggarwal’s startup will get a premium valuation but a string of Indian startups are trading below their IPO prices, and he would be wise to leave enough value on the table to distinguish Ola from that crowd.
Ola Electric Mobility, India’s largest electric scooter maker, is facing investor pushback on its targeted valuation for its upcoming initial public offering, Bloomberg reported on June 21, citing unnamed people familiar with the matter.
The company’s founder Bhavish Aggarwal has been aiming for a potential valuation of $7 billion in a Mumbai listing, higher than a valuation of about $5 billion based on initial feedback from investors.
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