Indian electric scooter maker Ola Electric expects revenue to quadruple to $1.5 billion (nearly Rs 12,300 crore) this fiscal year and then double again within two years, according to a document containing company forecasts and people familiar with the matter.
However, the figures were released before the federal government unexpectedly cut e-scooter incentives in May.
The document was prepared ahead of an investor meeting for Ola’s planned IPO worth up to $700 million (nearly Rs 5,700 crore) and was reviewed by Reuters. The company also plans to post an operating profit of $220 million (nearly Rs 1,800 crore) for the year ended March, according to the filing.
The revenue target of $1.5 billion compares with results of $335 million (nearly Rs 2,750 crore) in the previous fiscal, two people familiar with the matter said, adding that Ola’s internal estimates have not changed since the document was drafted in April.
Ola, which is backed by Japan’s SoftBank Group and Singapore’s Temasek, did not respond to repeated requests for comment from Reuters.
Since starting sales in late 2021, Ola has emerged as the leader in India’s e-scooter market with a 32% share, competing with the likes of Ather Energy and the likes of TVS Motor and Hero Electric. The company was valued at $5 billion (nearly Rs 41,000 crore) last year and has raised nearly $800 million (nearly Rs 6,650 crore) from investors since 2019.
Incentives slashed
The Indian government has said it hopes that electric models will account for 70% of two-wheeler sales (which also includes motorcycles) by 2030, a significant increase from the current 14%.
But in May, the company shocked the market by slashing cash incentives for e-scooters without explanation, saying it would only pay up to 15% of the pre-tax price. The company had earlier pledged to pay up to 40% of the fees.
Industry-wide sales of electric scooters in India fell by more than half in June from May to 45,800 units, a six-month low, government data showed.
Jay Kale, vice president at Elara Capital, said: “Subsidy cuts pose a barrier to growth for all (electric scooter) companies as prices for consumers increase. Revised forecasts have to be applied, which also affects valuations.”
But in an interview with India’s Business Standard last week, Ola Chief Executive Bhavish Aggarwal said he was not bothered by the subsidy cuts and said last month’s industry-wide decline in sales was only a “short-term blip.”
Agarwal said the “subsidy after the current cut is an appropriate amount”, adding that the company could survive “without” such incentives.
Ola expects to sell 882,000 scooters this fiscal year and 2.9 million in two years, according to documents seen by Reuters.
By comparison, KPMG forecast demand for just 1 million e-scooters this financial year in a June report, a third lower than its previous estimate. It predicts industry-wide sales of just 2 million vehicles within two years.
Industry data shows that Ola sold 68,316 electric scooters in the just-ended quarter. That’s 17% less than the 82,000 estimated in documents seen by Reuters.
Ola aims to achieve revenue of $3.9 billion (nearly Rs 32,000 crore) and operating profit of $578 million (nearly Rs 4,700 crore) within two years, the filing showed.
For the IPO, Ola is working with the likes of Goldman Sachs and Bank of America and has started holding early meetings with investors to brief them on the company’s plans.
© Thomson Reuters 2023