Electric vehicle giant’s successful listing validates Tamil Nadu’s strategic push into sustainable mobility, with its Rs 40,218 crore valuation signaling strong investor confidence
In a remarkable market debut that underscores Tamil Nadu’s growing prominence as an electric vehicle manufacturing hub, Ola Electric Mobility saw its shares surge 20% on their first day of trading, reaching the upper circuit at Rs 91.2. The listing, which values the company at Rs 40,218 crore, marks a significant milestone for both the company and the state’s burgeoning EV ecosystem.
The Bhavish Aggarwal-led company, which operates its flagship Future Factory in Tamil Nadu, demonstrated strong market confidence despite a relatively modest 4.3 times subscription rate in its Rs 6,146 crore initial public offering. The successful listing has cemented the position of 38-year-old Aggarwal among the world’s youngest billionaires, with his net worth exceeding $1.5 billion.
Tamil Nadu’s strategic bet on electric mobility is paying off as Ola Electric continues to expand its presence in the state. The company is currently developing new EV hubs in the Krishnagiri and Dharmapuri districts, building upon its existing manufacturing infrastructure. These developments are part of Tamil Nadu’s broader vision to become India’s premier EV manufacturing destination.
The company’s market performance reflects growing investor confidence in India’s electric two-wheeler sector, particularly in Tamil Nadu’s manufacturing capabilities. With a current valuation of 8 times its sales (approximately Rs 5,000 crore in FY24), Ola Electric’s market positioning is comparable to established traditional two-wheeler manufacturers who trade between 3x and 8x sales.
“We believe that Ola has significant headroom to grow in coming years led by favorable market conditions, regulatory norms, and the higher capacity utilization of Ola Future factory on a yearly basis,” stated Anand Rathi in a research note. The recent commencement of cell manufacturing at the Ola Gigafactory in March 2024 is expected to enhance the company’s control over battery and EV quality, supply, and costs.
The success story of Ola Electric is particularly significant for Tamil Nadu’s startup ecosystem. The state’s policy initiatives and infrastructure support have created a conducive environment for EV manufacturing, attracting both established players and innovative startups. Ola’s dominant market position, commanding 35% of total e2W registrations in FY24, validates Tamil Nadu’s strategy of positioning itself as a key player in India’s electric mobility revolution.
Industry experts are optimistic about the sector’s growth trajectory. According to Redseer, electric two-wheeler penetration in India is projected to expand dramatically from 5.4% in FY24 to 41-56% of domestic two-wheeler sales volume by FY28. The Indian e2W industry is expected to achieve a compound annual growth rate of 11%, reaching a market size of $35-45 billion by FY28.
The IPO proceeds of Rs 5,500 crore will primarily fund the expansion of Ola’s cell manufacturing capacity from 5GWh to 6.4GWh, along with debt repayment and research and development initiatives. This expansion is expected to create additional employment opportunities and strengthen Tamil Nadu’s position in the EV supply chain.
“Tamil Nadu’s supportive policy framework and robust infrastructure have been crucial in our growth story,” said a senior Ola Electric executive. “The state’s vision aligns perfectly with our mission to accelerate India’s transition to sustainable mobility.”
The successful listing of Ola Electric represents more than just a corporate milestone; it validates Tamil Nadu’s strategic focus on electric mobility and sustainable manufacturing. As the state continues to attract investments in the EV sector, Ola’s success story is likely to inspire more startups and established companies to leverage Tamil Nadu’s ecosystem for their electric mobility ventures.
