What negative GMP means for Ola Electric's market debut tomorrow
The initial enthusiasm surrounding the Initial Public Offering (IPO) of Ola Electric, India's leading electric two-wheeler manufacturer, has diminished. This is due to the company's Grey Market Premium (GMP) remaining negative ahead of its stock market debut. The negative GMP indicates a potential negative listing for the stock, meaning investors may lose money. This comes as a surprise because there was strong initial interest in the IPO and Ola Electric's status as a market leader in the electric two-wheeler segment.
Ola Electric's GMP dips despite strong IPO response
When the IPO was announced, the premium for Ola Electric's shares was around 18-20%. The issue closed on August 6, with a subscription rate of 4.26 times driven by a decent response from qualified institutional buyers and retail investors. However, due to shifting market sentiments, the GMP has fallen into negative territory. At the time of writing, the GMP for Ola Electric IPO was -₹3, suggesting the stock may list at ₹73 (nearly 4% below IPO price of ₹76).
Ola Electric's pre-IPO funding and financial performance
Before the IPO opening, Ola Electric raised just over ₹2,700 crore from anchor investors including Nomura, HDFC Mutual Fund, SBI Mutual Fund among others. The company's revenue from operations rose to ₹5,009.8 crore in fiscal 2024 from ₹2,630.9 crore in fiscal 2023 due to increased sales of the Ola S1 and Ola S1 Pro scooters. However, the company's loss also significantly increased to ₹1,584.4 crore in FY24 from a loss of ₹1,472 crore in FY23.
Ola Electric's IPO subscription details and market debut
The IPO was fully subscribed on the second day of bidding, with the employee section having the highest subscription rate at 8.98 times. The retail component and non-institutional investors portion were subscribed 2.87 times and 1.11 times, respectively, while the qualified institutional buyer (QIBs) portion was subscribed 40%. Ola Electric is set to make its debut on the stock exchanges tomorrow after raising ₹6,145.56 crore through its IPO.
