Investment company Vanguard lowers Ola's estimated worth to $1.25 billion amid doubts about the ride-hailing service's forthcoming Initial Public Offering.
Rewritten Article:
Heads Up: Vanguard ain't so fond of Ola anymore—they've slashed the ride-hailing company's valuation by a whopping 80%. And guess the new price tag? Just $1.25 billion, a steep drop from the peak of $7.3 billion in '21.
This wasn't always the case. Back in Feb '24, Vanguard pegged Bhavish Aggarwal's crew at $1.88 billion for the first time. They upped that a bit to around $2 billion by November. But the latest assessment ain't too flattering.
Why's that, you ask? Well, ol' Ola ain't been doing too hot in India's fierce ride-hailing game, even though they're aiming for a public listing. Right now, they're in third place when it comes to daily ride volumes, with Rapido and Uber leading the charge.
In fact, Rapido, backed by Swiggy, has become the Shining Knight in this sector, offering bike taxis, auto rickshaws, and cabs. They turned unicorn last year after bagging $200 million at a valuation of $1.1 billion.
Remember when Aggarwal announced the rebranding of Ola Cabs to Ola Consumer last August? They were planning to bundle up financial products, cloud kitchens, and electric logistics under one sweet brand.
But despite converting into a public company in Nov '24 and scoping out IPO possibilities ever since, they haven't taken any concrete steps. Market experts suspect that Ol' Ola might postpone their IPO by at least six months due to shaky market conditions and falling valuations—especially for their electric vehicle arm, Ola Electric.
ICRA even went so far as to downgrade the debt rating of Ola Electric Mobility Limited's auto division. They lowered the rating of four debt instruments from 'A' to 'BBB+' and kept a negative outlook, blaming Ola Electric for failing to meet sales expectations and reaching profitability.
Thanks to these slower sales, ICRA thinks Ola Electric will have to come knocking for some extra cash in the next 12-24 months, as their existing reserves start dwindling.
Insights
- Ola's slipping market position and fierce competition have played a significant role in the drop in its valuation.
- Revenue declines and a challenging market landscape have raised concerns among investors, contributing to the falling valuation.
- Market experts anticipate that Ol' Ola might delay its IPO due to unfavorable market conditions and weak investor sentiment.
- Ola's diversification into financial services, cloud kitchens, and electric logistics may help compensate for declining core business performance, but effective execution will be key.
- The decline in Ola's core business performance, coupled with intense competition in the ride-hailing market, has significantly contributed to the fall in its valuation, as acknowledged by financial institutions like Vanguard.
- Amidst revenue declines and a challenging market landscape, there are speculations that Ola may postpone its IPO due to unfavorable market conditions, waning investor sentiment, and the need for improved execution in its diversification strategies, including financial services, cloud kitchens, and electric logistics.
