BENGALURU: The initial public offering (IPO) of Ola Electric Mobility, a prominent player in the burgeoning electric two-wheeler market, exhibited a stark contrast in investor sentiment over its three-day subscription period.
While the IPO witnessed a sluggish start on August 2nd, with only 35 per cent subscription, it saw a surge in interest on the second day, ultimately reaching full subscription by the end of the day.
The initial share sale received bids for 49,43,85,840 shares, as against 46,51,59,451 shares on offer, according to BSE data.
The unexpected turnaround raises several questions about investor behaviour and the overall market perception of Ola Electric.
The initial tepid response, with only 16.31 crore shares subscribed against the 46.51 crore shares offered, reflected a cautious approach from investors. This could be attributed to several factors.
The IPO, priced between Rs72 and Rs76 per share, was significantly larger than the company’s previous fundraising rounds, potentially causing hesitation among investors.
Public interest
Additionally, the market was grappling with broader economic uncertainties, leading to a general risk aversion among investors.
However, the second day of bidding saw a remarkable shift in sentiment. The IPO witnessed a strong surge in demand, driven largely by retail investors.
The retail portion was oversubscribed 2.87 times, demonstrating the public’s interest in the company and the growing appeal of the electric vehicle segment.
Notably, the employee portion was the most oversubscribed at 8.98 times, highlighting a strong belief in the company’s future from its own workforce.
The strong employee participation further reinforces the positive sentiment within the organization.
The Qualified Institutional Buyers (QIBs) portion, despite being subscribed 40 per cent, reflected a more measured approach. This could be attributed to their focus on long-term value creation and a more in-depth analysis of the company’s financials and future prospects.
Varying levels of participation
Despite the overall subscription success, the IPO’s journey serves as a stark reminder of the unpredictable nature of the market. The initial lukewarm response highlights the inherent risk and scrutiny faced by companies seeking public listing.
While Ola Electric’s strong performance on the second day indicates a confidence in the company’s future, the varying levels of participation from different investor segments point towards a complex dynamic at play.
It is important to note that Ola Electric secured Rs 2,763 crore from major investors prior to the IPO opening, demonstrating strong confidence in the company’s potential. This pre-IPO funding likely played a role in attracting further investment, particularly from retail investors who may have been more inclined to follow the lead of established institutional investors.
Looking forward, Ola Electric’s successful IPO offers valuable insights into the evolving investor landscape. The surge in retail investor participation points to a growing interest in the electric vehicle sector, driven by environmental concerns and government incentives.
However, the company faces significant challenges. The electric two-wheeler market is fiercely competitive, with established players and new entrants vying for market share. Additionally, the company needs to navigate evolving consumer preferences and address concerns regarding battery performance and charging infrastructure.
