19 October, 2024
Ola Electric surges 20% in India's biggest listing in two years
Ola Electric, India’s largest electric two-wheeler maker, surged by 20% on its public debut on Friday, making it the biggest listing among Indian firms in two years.
Shares of the Bengaluru-based firm, which counts SoftBank and Temasek among its backers, jumped to ₹91.20 (about $1.1) after starting to trade at ₹76, the higher end of its $733 million IPO price range. The company filed to go public at a valuation that was 26% lower than the $5.4 billion it achieved in a funding round in October 2023, and significantly below the $6.5 billion to $8 billion range it had initially targeted for the IPO.
The stock, which hit the upper circuits on the local exchanges, closed the day at ₹91.2, giving Ola Electric a market capitalization of $4.8 billion.
Ola Electric has emerged as the dominant player in India’s electric two-wheeler market, enjoying 46% share in the sector. Ola launched its first electric scooter in December 2021 and has sold more than 330,000 units in the financial year ended March 2024.
The company is not yet profitable, however. It reported net loss of ₹16 billion (about $200.5 million) and EBITDA loss of ₹13 billion (about $162.8 million) on annual revenue of ₹50 billion (about $626.3 million) in its last financial year.
The company has been investing in vertical integration to better control quality, supply and costs — it has initiatives to develop its own battery cell technology as well as build manufacturing capabilities. It plans to expand capacity to 20GWh by the second quarter of 2026.
The electric vehicle market in India is poised for substantial growth. Investment banking and research firm Macquarie expects electric two-wheelers to gradually increase their share of the two-wheeler market in the country, estimating market penetration rates of 7%, 10%, 13% and 16% for the fiscal years 2025, 2026, 2027 and 2028, respectively.
That differs quite a bit from Ola Electric’s much more optimistic forecast for electric two-wheelers: In its IPO prospectus, the company expects the category to reach 41%-56% market share by fiscal year 2028.
Recent reductions in government subsidies for electric two-wheelers have impacted the sector’s growth trajectory. Still, the Indian electric vehicle market has seen some consolidation — the Herfindahl-Hirschman Index (HHI), a measure of market concentration, has risen to 2,810 as of June 2024 from 1,200-1,330 in fiscal years 2022-2023. That’s higher than the 2,160 number for traditional two-wheelers that run on internal combustion engines.
Ola founder's Krutrim becomes India's first AI unicorn
Krutrim, an AI startup founded by Ola founder Bhavish Aggarwal, said it has raised a funding round that values it at $1 billion. The startup, founded last year, is the fastest to become a unicorn in India, it claimed in a press statement. It’s also the first Indian AI startup to become a unicorn, it said.
Matrix Partners India — which has also backed Aggarwal’s other two startups, ride-hailing platform Ola and EV startup Ola Electric — led the $50 million “first round” in Krutrim. TechCrunch reported last year that Aggarwal was in talks to raise $50 million for his new AI venture.
Krutrim, which means “artificial” in Sanskrit, is building a large language model that has been trained on local Indian languages in addition to English. The startup plans to launch a voice-enabled conversational AI assistant that understands and speaks multiple Indian languages, the startup said.
It plans to make a beta version of its eponymous chatbot available to consumers next month and follow it by rolling out APIs to developers and enterprises. On its website, Krutrim says it also plans to develop in-house capability to manufacture chips optimised for AI compute. TechCrunch reported earlier that Aggarwal’s new venture will explore developing and designing chips.
Krutrim is Aggarwal’s third venture. Ola, his first, leads the ride-hailing market in India and is eyeing profitability. Ola Electric leads the two-wheeler EV market in India and recently filed the paperwork for a $662 million initial public offering.
“India has to build its own AI, and at कृत्रिम, we are fully committed towards building the country’s first complete AI computing stack,” Aggarwal said in a statement. “We are thrilled to announce the successful closure of our first funding round, which not only validates the potential of कृत्रिम ’s innovative AI solutions but also underscores the confidence investors have in our ability to drive meaningful change out of India for the world.”
The investment in Krutrim comes at a time when investors globally are rushing to identify and back AI breakthrough, banking on the thesis that advances in AI will make countless industries more efficient and startups at the forefront will deliver generational returns.
Despite being home to one of the world’s largest startup ecosystems, India has yet to make a material impact in the AI race. Indian contenders have yet to emerge and challenge the dominance of large language model titans such as OpenAI’s ChatGPT, Amazon-backed Anthropic, or Google’s Bard.
Indian powerhouse Reliance partnered with Nvidia in September, revealing plans to build a large language model that is trained on India’s diverse languages. But the firm — run by Mukesh Ambani, Asia’s richest person — has yet to launch its AI offering.
Peak XV and Lightspeed India recently backed Sarvam, an AI startup that is also building a large language model.
Training a large language model has proven to be a very expensive endeavour. OpenAI has raised over $11 billion to date, whereas Anthropic has also raised billions from investors including Google and Amazon. xAI, Elon Musk’s AI startup, is in talks to raise up to $6 billion at a valuation of about $20 billion, Financial Times reported Friday.
Where is India in the generative AI race?
Indian ride-hailing giant Ola quits UK, Australia and NZ in international pullback
Indian ride-hailing giant Ola is shutting down its operations in the U.K., Australia and New Zealand, six years after expanding to international markets, as it shifts focus to shoring up its domestic business ahead of an initial public offering.
An Ola spokesperson told TechCrunch that the SoftBank-backed ride-hailing startup sees “immense opportunity for expansion in India,” where it operates in hundreds of cities and offers a range of transportation options, including two-wheelers.
“With this clear focus, we’ve reassessed our priorities and have decided to shut down our overseas ride-hailing business in its current form in the U.K., Australia and New Zealand,” the spokesperson added.
Valued at $7.3 billion in 2021, Ola is among the most high-profile startups in India and is backed by some of the biggest names, including Temasek, Tiger Global and Warburg Pincus. The startup plans to file for an initial public offering after the public listing of Ola Electric, the electric two-wheeler brand in India that spun out of Ola.
Ola Electric is looking to raise $662 million from its IPO in India, according to paperwork it filed late last year.
Ola and Uber, its chief rival in India, slowed their domestic expansion during the pandemic and have since largely focused on improving their unit economics. The two firms have explored merging businesses in recent years, but have been unable to reach an agreement. Both continue to insist publicly that they have no interest in partnering with the rival. (Uber sold its Indian food delivery business to local giant Zomato in early 2020.)
Uber chief executive Dara Khosrowshahi recently told Indian daily Economic Times that the ride-hailing app’s market share has never been higher in the South Asian market.
“While (rival) Ola focuses on other areas … we love the ride-sharing business. We also continue to expand into new categories and are dedicated to sustainability. Some of our competitors are distracted by shiny, new efforts and IPOs; that’s great. I’m undistracted and completely focused on the mobility business here as there’s an enormous amount of upside for us and our positioning has never been better,” the Economic Times quoted Khosrowshahi as saying.