Indian e-scooter manufacturer, Ola Electric, is projecting a substantial surge in revenue over the next few years, according to confidential documents and insiders familiar with the matter. The company expects its revenue to quadruple to $1.5 billion in the current financial year, with a further doubling to $3.9 billion within the next two years. These projections were prepared in advance of Ola’s planned Initial Public Offering (IPO), which aims to raise up to $700 million and has attracted interest from investors.
Despite the optimistic projections, the figures were compiled before the Indian government unexpectedly reduced e-scooter incentives in May. Previously, the government had pledged to cover up to 40% of the pre-tax price, but it ultimately scaled back the incentives to just 15%. This decision sent shockwaves through the market, leading to a sharp decline in e-scooter sales the following month.
Despite the incentive cuts, Ola Electric’s CEO, Bhavish Aggarwal, remains unfazed. He believes that the revised subsidy amount is appropriate and asserted that the company can thrive without relying heavily on incentives. Ola Electric, backed by investors like SoftBank Group and Temasek, has already established itself as the leader in India’s e-scooter market, commanding a significant 32% market share since its sales launch in late 2021.
The company’s IPO plans have put its expected performance under the spotlight. Ola Electric is targeting $220 million in operating profit for the year ending in March, and the estimated revenue of $1.5 billion for the current financial year is a substantial increase compared to the previous year’s result of $335 million.
According to the confidential document reviewed by Reuters, Ola Electric aims to sell 882,000 scooters this financial year and nearly three million units within two years. However, market analysts from KPMG have projected lower e-scooter demand for this financial year, estimating sales of just one million units, one-third lower than previous estimates. Furthermore, KPMG predicts industry-wide sales of only two million e-scooters within two years.
The subsidy cuts have raised concerns among investors and industry experts, with fears that revised projections may affect valuations for all e-scooter companies, including Ola Electric. Industry data for the most recent quarter shows Ola selling 68,316 e-scooters, slightly below the 82,000 units estimated in the document seen by Reuters.
Despite the short-term blip in industry-wide sales, Ola Electric remains bullish on its future prospects. The company is working with financial giants Goldman Sachs and Bank of America, among others, to launch its IPO successfully. Ola’s leadership has already begun early meetings with potential investors to share their vision and plans for the company’s future growth.