Ola Cabs Plans for IPO in 2022

One of India’s most popular ride hailing service, Ola Cabs, is likely to come out with an IPO in the first half of 2022. The company is yet to file the DRHP with SEBI but that is likely to happen at the earliest.

Ola is one of the highly valued Unicorns in the Indian digital space and is backed by some of the marquee names like Softbank, Tiger Global and Tencent.

While the actual size of the IPO is yet to be finalized, the markets are estimating the IPO size to be in the vicinity of $1.00 billion to $1.50 billion. This IPO would be a combination of a fresh issue and an offer for sale wherein some select early investors will take in exit via the IPO.

Of course, one important consideration will be the market appetite for digital IPOs at that point of time.

Meanwhile, Ola is in the midst of creating of a Super App, which will go much beyond its core cab hailing service. The Super App will look at leveraging the customer franchise of Ola to cross sell other products like personal finance products, micro insurance etc.

This will not only diversify the revenue mix but also improve the ROI per customer.

Check - Ola in talks with Investment Bankers

The year 2021 has been a year that belonged to the digital IPOs with multi-billion dollar unicorns like Zomato, Nykaa, Paytm and Policybazaar raising money in the Indian IPO markets.

These 4 IPOs put together raised nearly Rs.40,000 core between them and that should give confidence to Ola, notwithstanding the muted response to Paytm.

Ola was one of the few Unicorns to be badly hit by the pandemic and it is just about recovering. The pandemic had brought the cab hailing service to a virtual halt and that had resulted in accumulated costs for the company. However, in the last on year, Ola has been rapidly ramping up its business to a more reasonable level.

But the big story where the markets will be really looking for clarity ahead of the IPO would be the electrical vehicles or EV business. Ola has set the tone for its EV business by starting off with its Electrical Scooters business and it has already received around 1 million reservations for the product.

The bigger plan from a customer point of view is the proposed launch of an Electric Car by 2023, which could be the real game changer. Here it is likely to compete with the likes of Tata Motors, which is already very aggressive in the EV space.

In a nutshell, Ola may be looking at becoming something for everybody. Whether such a large scale diversification of business enhances profits or whether it dilutes the core strength of Ola remains to be seen.

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