InvestorQ : With big IPOs like Paytm and Star Health struggling, what do you think will determine the success of the Ola Cabs IPO?
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With big IPOs like Paytm and Star Health struggling, what do you think will determine the success of the Ola Cabs IPO?

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Rashi Mehra answered.
5 months ago
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Let us look at the Ola Cabs proposed issue first because the company IPO is still some time away and they are yet to file the DRHP. Ola is among the highly valued Unicorns in the Indian digital space and has the equity backing of big names like Softbank, Tiger Global and Tencent. It is estimated that the IPO will be a mix of fresh issue and offer for sale and markets are estimating the IPO size in the vicinity of $1.50 billion.

There are two features that Ola would be betting on apart from its core cab hailing service in India, ahead of its IPO. It is currently in the midst of creating a Super App, which will leverage the customer franchise of Ola and use the customer experience to cross sell other products like personal finance solutions, micro insurance etc. This will diversify revenue mix but also help to mine customer data better and improve the ROI per customer.

Th other big story is the electrical vehicles or the EV story that Ola is currently betting on. Ola has set the tone for EV business by starting off with its Electrical Scooters venture and this already has 1 million advance reservations for the product. By 2023, Ola proposes to launch its Electric Car, which could be the real game changer. Ola will compete with the likes of MG Hector and Tata Motors in this space, which is likely to be valuation accretive.

On the downside, it can be overlooked that Ola was one of the few Unicorns to be badly hit by the pandemic and it is just about recovering from the blues. The pandemic actually brought cab hailing service to a virtual halt due to the restrictions on movement and travel. That is just about beginning to change. The big question is whether the Ola strategy of being something for everybody will eventually work for its valuations.

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