Ola inching closer to profitability, may float IPO in two years: Report

Ola, the Indian cab hailing major and Uber’s main competitor in the country, has its fingers in a lot of things: core taxi business, two-wheeler transportation and logistics, and a full-fledged e-mobility venture. In a new development, the $7 billion Bengaluru-based firm is said to be looking at an initial public offering, or IPO, in two years.

According to a report in financial newspaper Mint, Ola is inching closer to profitability and may just churn out a small bottomline in its FY19 financials, which it hasn’t been released so far. In FY18, ANI Technologies, which operates the Ola brand, had losses of Rs 2,842 crore and revenues of Rs 2,222 crore, according to the company filings. The loss figure is lower than Rs 4,898 crore in FY17 but higher than Rs 2,314 in FY16.

In order to float shares on Indian bourses, a firm has to be profitable for at least three years. The other method is to list on an adjoining platform Innovator’s Growth Platform (IGP), meant for SMEs and start-ups, which offers some relaxation in terms of listing requirements.

While Ola’s high cash burn, owing to its fierce fight with Uber, is a dampener, some of its recent bets on newer areas make it attractive. In 2017, the company started an e-mobility venture called Ola Electric Mobility, which is creating an ecosystem of e-vehicles through partnerships with state governments. It was later hived off into a separate firm and went on to raise $280 million from investors such as Softbank, Matrix Partners and Tiger Global Management.

Ola has also invested $100 million in scooter start-up Vogo, in a mix of equity and debt, in what was a strategic tie-up where Vogo scooters may be used as Ola Bike Taxis or for its food delivery operations under FoodPanda.

However, Ola has floundered on its food delivery bet. FoodPanda, which Ola acquired for $40 million in 2017, recently suspended operations and laid off bulk of its staff.

A lot investor money is riding on Ola, which has raised a total of $3.8 billion, according to Crunchbase, since its inception in 2010. As of start of this year, Softbank owned 24.6 per cent, Tiger 15 per cent, Tencent 10% and Matrix 8 per in Ola. In March this year, Ola raised $300 million from car makers Hyundai and Kia, which many saw as automakers’ bet on new mobility solutions when car sales are falling.

According to Tracxn data, the promoter group holds 10 per stake in Ola, with 6.7 per cent held by Bhavish Aggarwal.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel