4 Upcoming EV IPOs to Watch Out For

The electric vehicle (EV) segment has emerged as a compelling opportunity for investors as the government is taking several initiatives for sustainable mobility.

The central government has laid strong emphasis on the promotion of green mobility. As part of the strategy, it came out with the faster adoption and manufacturing of (hybrid &) electric vehicles in India scheme (FAME India) to promote the adoption of electric vehicles.

With this craze for EVs, EV registration grew to 819,223 units between June to December 2023 (till 15 December) compared to 684,789 vehicles in the same period in 2022, registering nearly 20% growth. This has led to increasing interest in electric vehicle stocks among investors.

At the same time, these stocks have been rewarding too, with returns of up to 450% in the past year. Leading EV stocks like HBL Power, Olectra Greentech, JBM Auto, Tata Motors, and Bharat Electronics have given returns of up to 450% in the last year.

While current EV stocks may appear pricey for investors, exciting developments are on the horizon.

The EV market is anticipated to witness heightened activity with the forthcoming debut of four new EV stocks.

#1 Ola Electric

First on the list is Ola Electric, the biggest mobility platform in India.

It is one of the biggest ride-hailing entities in the world, operating in over 250 cities across the UK, New Zealand, Australia, and India.

Its D2C omnichannel distribution network comprises an integrated company-owned sales and service network, a charging network, and an online retail platform.

The company plans to raise Rs 55 billion (bn).

Ola Electric is India's first electric vehicle (EV) maker to launch an IPO. It paves the way for other EV startups and solidifies its position as a leader in the rapidly growing Indian EV market.

The last IPO in the Indian automobile sector was Maruti Suzuki in 2003. Ola Electric's IPO breaks this long gap, highlighting the changing landscape of the automobile industry and the increasing emphasis on sustainable mobility solutions.

Ola has emerged as a successful platform, with over 1 bn rides served each year.

The company has also been approved for India's PLI schemes - one relating to manufacturing advanced automotive technology products (Automobile PLI Scheme) and another relating to advanced cell chemistry batteries (Cell PLI Scheme).

The company recently announced new EV scooter models, the Ola S1 X (2 kWh), Ola S1 X (3 kWh), and Ola S1 X+. It started delivering Ola S1 X+ in December 2023.

It plans to commence delivery of the Ola S1 X (2 kWh) and the Ola S1 X (3 kWh) by the first half of 2025.

It is also working towards delivering the recently announced line-up of four motorcycle models: Diamondhead, Adventure, Roadster, and Cruiser in 2026.

#2 Hyundai Motor

Second on the list is Hyundai Motor.

Hyundai is the second-biggest automaker in India, with a 15% market share.

Hyundai Motor is likely to file draft IPO papers in India by May-June for approval, while the issue could be launched by October-November 2024.

Hyundai IPO would be worth US$ 3 bn (Rs 248.7 bn), the largest in India.

South Korean automaker Hyundai Motor is planning to list its Indian unit and is likely to file regulatory papers in India by May to June for approval.

The company is in the initial stages of considering an initial public offering (IPO) in India that would value its local operation at up to US$ 30 bn. The IPO could be India's largest.

The company plans to use the IPO proceeds largely to fund the launch of EVs in India and set up a charging network and a battery facility.

Accelerating listing plans in the world's third-largest auto market, Hyundai has also appointed investment bankers.

The fundraising by Hyundai would put the valuation of its Indian operation at more than half its market capitalisation of around US$ 47 bn in Seoul.

#3 Tata Passenger Electric Mobility

Third on the list is Tata Passenger Electric Mobility.

Tata Motors inaugurated a new subsidiary, Tata Passenger Electric Mobility (TPEML), for the sole purpose of manufacturing EVs.

TPEML will hold 100% of the share capital in its EV unit, and the initial capital allocated was Rs 7 bn.

Over the next five years, Tata Motors has plans to invest US$ 2 bn in this EV business.

TPEML has a robust pipeline of "New Forever" products that can set momentum in the electric vehicles space.

Currently, TPEML has launched two electric models - Nexon EV and Tiago EV, that are conquering Indian roads.

But that's not all. TPEML already boasts a staggering 80% market share in the Indian EV market.

The IPO of Tata Passenger (TPEML)is expected to be a game-changer and could be valued between US $1-2 bn.

The IPO window is expected to open within the next 12-18 months.

TPEML has already sold 53,000+ electric cars in 2024 so far. This is a 69% YoY increase in EV sales, including exports.

As per recent reports, the company expects to sell 100,000 more in 2025.

In the next 3-4 years, the company plans to launch 10 new electric cars, further solidifying its position as a major EV player.

#4 Ather Energy

Last on the list is Ather Energy.

Founded in 2013 by IIT Madras whiz kids Tarun Mehta and Swapnil Jain, Ather Energy is making waves in the Indian EV market. This innovative company is leading the charge for sustainable two-wheeler transportation.

The company launched its first scooter, S340, in 2016, and it has now expanded to 150 experience centres in 100 cities.

Ather Energy is setting its sights high, with a potential IPO valuation of US$ 2 bn. They're also aiming to raise US$ 400 million (m) through the share sale.

Nevertheless, remember, these numbers are just estimates and could change.

HSBC, JP Morgan Chase & Co, and Nomura are just a few of the big names joining forces to make Ather's public debut a reality.

The IPO is expected sometime in the second half of 2024 or early 2025. There is also a possibility of more banks getting involved in the IPO process.

While Ather Energy currently focuses on sporty scooters appealing to a specific niche audience, they're about to make a big shift. To capture a wider market share, they're gearing up to launch a family scooter in 2024 with Ather Rizta.

Going forward, its focus is to achieve healthy gross margins.

Although Ather Energy is primarily known for manufacturing electric scooters, their Ather Grid initiative marks their entry into the realm of Charge Point Operators (CPOs), contributing significantly to the growing EV charging infrastructure in India.

This charging infrastructure initiative includes solar-powered charging stations in various cities.

Conclusion

The electric vehicle (EV) sector in India is experiencing significant momentum, with the FAME II scheme continuing its second phase while anticipation builds for the rollout of FAME III.

Despite the absence of a mention of FAME III in the Interim Budget 2024, the government has introduced measures to bolster the EV ecosystem, including enhancing storage and charging infrastructure.

Notably, the government has substantially increased the budget allocation for the production-linked incentive (PLI) scheme to Rs 35 bn for FY 2024-25, up from Rs 4.8 bn in the previous financial year.

Additionally, the allocation for advanced chemistry cells (ACC) and battery storage under the PLI scheme has been raised from Rs 120 m to Rs 2.5 bn for 2024-25.

Moreover, state governments are also offering incentives to encourage the adoption of electric vehicles, aiming to mitigate pollution levels and reduce vehicular emissions.

The Indian EV market is hotter than ever, and electric scooters are leading the charge. With many exciting players emerging, it's a fantastic time to explore your options before picking your champion.

Nevertheless, it is always prudent to conduct thorough research before making any investment decisions.

Ensure that the investment aligns with your financial objectives and matches your risk tolerance level.

For more information on IPOs, check out the list of upcoming IPOs.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...