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US investment firm Vanguard cuts Ola's valuation to $1.25 billion as IPO faces uncertainty

IANS May 9, 2025 431 views

Ola, the ride-hailing startup led by Bhavish Aggarwal, is facing significant challenges in the Indian market. Vanguard's drastic valuation cut from $7.3 billion to $1.25 billion reflects the company's diminishing market position. The startup has fallen to third place in daily ride volumes and is struggling with its electric vehicle segment. Despite aspirations for an IPO, market conditions and financial challenges suggest a potentially prolonged path to public listing.

"The latest markdown comes as Ola continues to lose ground in India's competitive ride-hailing market" - Article Insight"
New Delhi, May 9: US-based asset management firm Vanguard has sharply reduced the valuation of ride-hailing company Ola to $1.25 billion, according to its latest filing with the US Securities and Exchange Commission (SEC).

Key Points

1

Vanguard reduces Ola's valuation from $7.3B to $1.25B

2

Ola slips to third place in ride-hailing market

3

Company explores delayed IPO strategy

4

Electric vehicle unit faces challenging profitability path

This marks a significant drop of over 80 per cent from Ola’s peak valuation of $7.3 billion in 2021.

Earlier in February 2024, Vanguard had valued the Bhavish Aggarwal-led company at $1.88 billion for the first time, later revising it slightly upward to around $2 billion in November last year.

The latest markdown comes as Ola continues to lose ground in India’s competitive ride-hailing market, even as it eyes a public listing.

Currently, Ola has slipped to third place in daily ride volumes, trailing behind Rapido and Uber.

Rapido, backed by Swiggy, has emerged as the new market leader, offering bike taxis, autos, and cab services.

The company became a unicorn last year after raising $200 million at a valuation of $1.1 billion.

In August 2024, Ola CEO Bhavish Aggarwal announced the rebranding of Ola Cabs to Ola Consumer, bringing together various services like financial products, cloud kitchens, and electric logistics under one brand.

Although Ola converted into a public entity in November 2024 and has been exploring IPO possibilities since then, no firm steps have been taken so far.

Market analysts now expect the company to delay its IPO by at least six months due to weak market conditions and falling valuations, particularly for its electric vehicle arm Ola Electric.

Meanwhile, ratings agency ICRA has downgraded the debt rating of Ola Electric Mobility Limited's automotive unit due to slower-than-expected sales and a challenging road to profitability.

The agency lowered the rating of four debt instruments of Ola Electric Technologies Private Limited from 'A' to 'BBB+' and maintained a negative outlook, citing the company’s delayed sales growth in electric two-wheelers.

ICRA contended that Ola Electric has struggled to ramp up its electric two-wheeler sales, leading to higher cash burn and pushing back the company's path to profitability.

As a result, the company may need to raise additional funds in the next 12 to 24 months as its existing cash reserves continue to deplete.

Reader Comments

Here are 6 diverse Indian perspective comments for the article:
R
Rahul K.
This is disappointing but not surprising. Ola expanded too fast into too many areas - cabs, EVs, cloud kitchens, financial services. Stick to your core strength first! Indian startups need to learn sustainable growth rather than chasing valuation hype. 🚕
P
Priya M.
As an Ola customer for 5+ years, I've seen service quality decline while prices increased. Rapido gives better deals now. Maybe this valuation cut will make Ola focus on customer experience rather than just expansion. Their electric scooters had so many quality issues too.
A
Arjun S.
Vanguard's valuation seems too harsh - $1.25B for a company that revolutionized urban mobility in India? Yes they made mistakes but they're still a strong brand. Hope they bounce back with better execution. #SupportIndianStartups
S
Sneha R.
The real story here is how Rapido overtook them! From bike taxis to now leading the market - shows innovation wins. Ola was sleeping while competitors were working. Indian consumers want value + reliability, not just big names.
V
Vikram J.
IPO delay is good news actually. Market conditions are tough and Ola needs to fix fundamentals first. Too many Indian startups rush to IPO without sustainable business models. Better to wait and come strong later.
N
Neha T.
Ola Electric had so much promise but execution failed. As an early adopter of their scooter, I faced so many issues - from software glitches to service delays. Hope they use this wake-up call to improve quality. India needs strong EV players! ⚡

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Tags:
Ola Bhavish Aggarwal Ride-hailing Startup Valuation Indian Tech Vanguard IPO
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