Ola Electric has been listed on India’s largest stock exchange for two years

Shares of Ola Electric, India’s largest electric two-wheeler maker, surged 20% in its stock market debut on Friday, making it the largest offering by an Indian company in two years.

Shares of the Bengaluru-based company, whose investors include SoftBank and Temasek, rose to ₹91.18 (around $1.1) after opening trade at ₹76, the upper end of its IPO price range. The company filed to list at a valuation that was 26% lower than the $5.4 billion it achieved in an October 2023 funding round and well below the $6.5 billion-$8 billion range it had originally targeted for the IPO.

The company’s shares are currently valued at ₹90, giving Ola Electric a market capitalization of $4.75 billion.

Ola Electric has emerged as a dominant player within the Indian electric two-wheeler market, having fun with a 46% share of the sector. Ola launched its first electric scooter in December 2021 and sold over 330,000 units within the fiscal yr ended March 2024.

The company will not be yet profitable, though. In the last fiscal yr, it reported a net lack of ₹16 billion (about $200.5 million) and an EBITDA lack of ₹13 billion (about $162.8 million) on annual revenue of ₹50 billion (about $626.3 million).

The company is investing in vertical integration to raised control quality, supply and costs – it has initiatives to develop its own battery cell technology, in addition to construct production capabilities. It plans to expand production capability to twenty GWh by Q2 2026.

The electric vehicle market in India is poised for significant growth. Investment, banking and research firm Macquarie expects electric two-wheelers to regularly increase their share of the two-wheeler market within the country, estimating market penetration rates of seven%, 10%, 13% and 16% in fiscal 2025, 2026, 2027 and 2028, respectively.

This is in stark contrast to Ola Electric’s way more optimistic forecast for electric two-wheelers: in its IPO prospectus, the corporate expects the category to realize a market share of 41%-56% by fiscal yr 2028.

Recent reductions in government subsidies for electric two-wheelers have impacted the sector’s growth trajectory. Despite this, the Indian EV market has seen some consolidation, with the Herfindahl-Hirschman Index (HHI), a measure of market concentration, rising to 2,810 in June 2024 from 1,200-1,330 in fiscal 2022-23. This is higher than the two,160 for traditional combustion engine-powered two-wheelers.