Hero has revenue of Rs. 35,000 crore & profit of rs. 4000 crores.Ola Electric has revenue of Rs 373 crore and loss of Rs 784 crore... OLA Electric (OE) aims 7-8 Bn $ IPO Valuation while Hero has 10 Bn $ valuation
Soneone explain rationale here !
Itachi777
Stealth
9 months ago
" but ola has innovation" , " kya matlab founder ke IIT se hone se valuation multiple jayada nhi hona chahiye" , " ola full indian saar. Support ola IPO saar. Lose your money while investors and founder make a lot saar" , " bro but ola founder ne Sanskrit waala chatgpt banaya hai. He sapports indian culture. So higher multiple to Banta hai" .
Prepare to hear this in coming days
No other word for this, but desh me ye sab bolne vale chutiyon ki kami to nahi hi h
More direct comparison would be Ather which is at 4x revenue/sales multiple ($900mn/$225mn)
Even giving Ola Electric an 8x multiple (best case, mass-market EVs), the valuation should be only $3bn
I have read that adding digital in front of any traditional business makes it worth a lot more and the PE of digital businesses is much higher than that of traditional businesses due to exponential growth potential of internet as per investors. Thats why so much difference
Itachi777
Stealth
9 months ago
9/10 founders recommend putting AI also somewhere in the startup name for higher valuation. Even if you are just using if else statements in your code
Ah yes, my Ola Electric bike will be a good vehicle to surf through the exponentially growing internet. But I get what you are saying. The inflow of VC money from the US and their mathematics behind valuations is nowing sipping into IPOs
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Company’s valuation is not only based on their current situation, but their future potential.
I am not here justifying or supporting ola, but this valuation is mostly due to
1. Majority of the market is seeing EVs as the future.
2. For India. Market that future is in EV two wheelers as compared to four wheelers.
3. Though there has been many EV players has been in market for long, but ola quickly surpassed them all in a short amount of time. So speed of scale compared to other EV OEMs
So the higher premium
If we compare it with Hero. Hero is a 40 yrs old company with 20+ active products to reach this scale. Where as Ola has reached this scale within 5 yrs (remember for OEMs lot of time goes in R&D and setting up factories as well, so not actually 5 yrs of selling) and is growing at much faster pace as compared to Hero
Pixeldynamic
Stealth
9 months ago
It's a bubble. Don't you think Hero can't make two wheeler EVs? Ola themselves used a Nordic country design initially with stiff suspension. What investors don't realize there's magnitudes of difference in R&D costs for ICE vs EV? You can ride in the short wave for sure if you want to but keep in mind it's easy to come up with OE competition that way similar to Mamaearth.
Also, you are forgetting about Ather which does higher revenue. OE is trying to maximise revenue and scale but not profitability. How are they handling stoppage of Fame 2 subsidy?
By bubble you mean Ola Valuation or EV market?
Hero can and they are actually doing it. But they still lack the conviction to go full throttle on EVs. That is why they keep investing in Ather to keep their options open but still plag safe.
Yes I know the company OLA acquired to get their product and R&D but then except Ather who didn’t? Some of them are actually buying scooters from china and selling in India with their brand name.
Also if you will check statista report on EV market share, Ather is at 5th position with 11%. Ola, okinawa, hero electric and Ampere is ahead of them. With Ola 21% market share, nearest to ola is Okinawa with 13%. So you see Ola is dominating the market. And the key is distribution.
Ather has super scooter, i love them. But they lack marketing and distribution. Whereas Okinawa, making china sourced rebranded poor quality scooters, is selling more than Ather because of distribution.
That is why Ola becomes obvious choice for investors, if they want to invest in EV OEMs in India.
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Changemaker
Stealth
9 months ago
@Elon_Musk Tesla is a show off status car so can charge higher. Not the same thing with Ola
President_Trump
Stealth
9 months ago
Same logic as Suzlon vs Adani green
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Tesla at its peak share price was worth more than all American auto companies combined . By the way people should realise ola wants to raise as much money as possible that is their goal , that is why it's doing an ipo . IPO is not done so that we can buy company shares at the correct price. Let's see if they have made a good assumption based on price setting supply and demand. I think a bull run is incoming might just be great timing
Its going to go the Paytm route. But OE seems to be banking on tech premium. Priced at premium because they are a tech company than a automative
Does not matter IPO will be oversubscribed anyway because of FOMO
Having used EV products from both companies extensively, I can tell you that both are shit-tier companies with garbage products. However, in an IPO, the actual product is not as important as people think.
Ola Electric has higher valuation because of growth potential. It's a growth stage company. Going by the sales figures you've shared, it's already growing at 2x YOY.
Hero is largely stagnant.
Agreed but its easier to do 2x of ₹10 as compared to doing 2x of ₹10 lakh. Once Ola's sales grows they will hit the stagnation ceiling too. And atleast for the next 5 years I don't see EV taking over ICE in 2W segment. And topping it with Ather valuation & the fact that Ola EVs are still catching fires (though rare incidents) this valuation makes no sense. Still the IPO will be oversubscribed because a lot of young investors have the risk appetite to invest in startups from a brand perspective than a valuation perspective.
you
Stealth
9 months ago
Startups valuations are made on promises for growth, Stock market valuation are on current numbers. With the number of people we have, IPOs fully subscribe to ho jayege, but phir markets will correct the rates - to actual valuations
MightyLazyGeekStar
Stealth
9 months ago
Selling the future
Qwerty2398
Stealth
9 months ago
IPO pricing is like employee compensation. There is no logic behind it. it about how much you can extract.
TheFailedEngineer
Student
9 months ago
Hero 4k cr profit is not coming from just ev.
Ola only they have ev..
Basically hero is already established in indian market .
By far what you said is already happen with paytm and phonepe.
Paytm users and transaction are more then any other app in india. But phonepe has higher valuation. But less transctions compare to paytm still paytm ipo we all know.
Havent they raised 1B in funding itself. Wont the cash in hand easily be around 700M + future potential of being a major player in the EV 2 wheeler space. I would love to see it at 3B and invest. Also they have recurring payments from customers on basis of charging stations which hero doesnt have. Only service fee is wht they can collect post sales.
Gob_Bluth
Student
9 months ago
Isn't ola bringing out a 4w ev. What will Ola bring in the car market, if Tesla is entering next year?
CristianoMessi
Stealth
9 months ago
You can have the same argument for Tesla vs Toyota. Even in this case, Tesla is far more valued than Toyota despite having far better sales figures. Stock market accounts for future earnings not past almost all the time
This brings the memories of analysis of Flipkart and Amazon, Swiggy - Zomato, some 7-8 years back
Funny to see similar kind of breakdowns by nobody’s.
Founders made money, employees made money, VCs made money, technology advanced, the ecosystem advanced.
But some how some idiot learns things like PE ratio, MAV, Moat and what all half ass analysis things and write a long post on these things.
Who cares if Ola is overvalued?
It is bringing money to India for EV advancements. Who cares if the founders are morons? There will be 1000s of smart engineers and leaders who will eventually build something of value.
Most importantly they will create value and grow. People who will rant will eventually become noise in the grand scheme of things.
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