Greaves Cotton’s shares surged by approximately 12% on December 24, 2024, after the company announced that its subsidiary, Greaves Electric Mobility Limited (GEML), had filed for an Initial Public Offering (IPO). This IPO is set to raise ₹1,000 crore (about $117.5 million) through a combination of a fresh equity issuance and an offer-for-sale (OFS) by existing stakeholders.
The announcement sent Greaves Cotton’s stock to an intraday high of ₹257.4 per share on the National Stock Exchange (NSE), with the stock remaining up by 10.27% at ₹252.89 by mid-morning. This positive market reaction reflects investor optimism about GEML’s future prospects in the fast-growing Indian electric vehicle (EV) market, particularly in the two- and three-wheeler segments, where GEML operates under the ‘Ampere’ brand.
The IPO, outlined in the draft red herring prospectus (DRHP) filed with the Securities and Exchange Board of India (SEBI), includes a fresh issue of ₹1,000 crore and an offer for sale (OFS) of up to 51 million shares from Greaves Cotton, alongside approximately 138.4 million shares from Abdul Latif Jameel Green Mobility Solutions DMCC, a key stakeholder. The funds raised from this IPO will primarily be directed towards enhancing research and development (R&D), scaling up manufacturing capacity, and establishing battery assembly capabilities—key areas of focus as GEML seeks to strengthen its position in India’s competitive EV market.
As one of the leading players in India’s electric mobility space, GEML’s strategic direction is centered on technological innovation and sustainability, which aligns with the broader trend of electrification in the automotive sector. The proceeds from the IPO will support these objectives, helping GEML to enhance its offerings and compete with other major players like Ather Energy and Ola Electric.
The Greaves Cotton board’s approval of the IPO reflects the parent company’s commitment to GEML’s growth, although the final structure of the OFS will determine the extent of Greaves Cotton’s stake in the subsidiary post-IPO. While the company’s long-term strategy remains focused on leveraging GEML’s growth potential, the market’s favorable response highlights growing investor confidence in the electric mobility sector in India.
In conclusion, GEML’s IPO represents a crucial step for both Greaves Cotton and its subsidiary. With strong backing for its growth and innovation plans, GEML is well-positioned to capitalize on the increasing demand for EVs, contributing to India’s shift toward a more sustainable transportation future.
