The rapid rise in Ola Electric Mobility Ltd shares is vindicating the founder’s push to list the company despite initial scepticism over valuation.

The stock has surged nearly 82% in less than two weeks, bringing its market capitalisation to over US$7 billion . The company’s initial public offering was India’s biggest in two years and saw participation from across investor segments.

The jump has helped founder Bhavish Aggarwal achieve his target valuation much sooner than expected, buoyed by strong investor demand in India’s hot IPO market. The country’s biggest e-scooter maker went ahead with the offering at a lower value after facing investor pushback amid concerns over its profitability.

“There is a serious belief among investors in India’s electric vehicle story,” said Aishvarya Dadheech, chief investment officer at Mumbai-based Fident Asset Management Pvt. “The gush of domestic liquidity is driving investors to seek exposure to newer themes and investment ideas and the EV sector is one of the biggest beneficiaries.”

Ola’s stellar debut also comes on the back of a rally in India’s other new technology businesses. Shares of food delivery firm Zomato Ltd, India’s first unicorn to get listed, and insurance marketplace operator PB Fintech Ltd have more than doubled this year and are top performers on a gauge of emerging markets consumer technology stocks.

“Many of these companies were loss-making at the time of their debuts but they were able to sustain investor interest only after prioritising profitability, which is going to be important for Ola as well,” said Mohit Nigam, a fund manager with Hem Securities Ltd.

Backed by SoftBank Group Corp and Tiger Global Management LLC, Ola reported that losses widened to 15.9 billion rupees for the financial year ended March 2024. Ola shares closed little changed on Wednesday.

  - Bloomberg