Vanguard Slashes Ola’s Valuation by 80% as Rapido and Uber Surge Ahead

Once a poster child of India’s startup ecosystem, Ola is now battling shrinking market share and investor skepticism. US-based investment giant Vanguard has slashed Ola’s valuation to $1.25 billion, an 80% drop from its 2021 peak of $7.3 billion. The latest markdown, revealed in a regulatory SEC filing, comes even as Ola touts a leaner business, profitability, and IPO readiness.

But the ground reality tells a more complex story — Ola is profitable, but not popular, and it’s revenue-rich but growth-starved.

Credits: Financial Express

A Fall From Grace: Ola’s Valuation Takes a Hit

Vanguard’s recent assessment is not the first red flag for Bhavish Aggarwal’s mobility empire. The asset manager first brought Ola’s valuation below the $2 billion mark in February 2023, pegging it at $1.88 billion. A short-lived recovery to $2 billion followed in November, but the latest valuation cut to $1.25 billion reflects broader concerns — stagnant growth, rising competition, and unclear long-term strategy.

To put it in perspective, Ola’s valuation is now almost on par with Rapido, a company that was once considered a niche challenger focused solely on two-wheelers.

Market Share Meltdown: Ola Slips to Third in Daily Rides

Despite being a pioneer, Ola has lost the momentum it once enjoyed. It now trails Rapido and Uber in daily ride volumes, a telling metric of user engagement and brand relevance.

Rapido, backed by Swiggy, has swiftly climbed the ranks by expanding its offerings from bike taxis to autos and cabs. The strategy has paid off: Rapido is now India’s largest ride-hailing platform by daily ride count, a position Ola once held comfortably.

While Uber maintains a steady presence in India, it is Rapido’s rapid rise that has truly disrupted the landscape. Ola, now in third place, is battling to stay relevant in a market it helped create.

Revenue vs Relevance: Ola Is Big, But Is It Bold?

Here’s where the irony lies: Ola still makes more money than both of its rivals.

FY24 Ride-Hailing Revenue Comparison:

• Ola: ₹1,761 crore

• Uber India (Mobility): ₹807 crore

• Rapido: ₹648 crore

In pure revenue terms, Ola’s ride-hailing business remains more than double that of Uber and nearly triple that of Rapido. But the warning signs are flashing: shrinking user base, lower engagement, and no international cushion to fall back on.

Ola’s Financials: Profitability at a Price

While growth has stalled, Ola has made significant strides in financial discipline:

• Operating revenue dropped 5.5% in FY24 to ₹2,012 crore from ₹2,128 crore in FY23.

• Net loss shrunk dramatically to just ₹10 crore, compared to ₹623 crore the year before.

• The company turned EBITDA-profitable, indicating it can sustain itself operationally.

But these gains came at a cost — Ola exited global markets including the UK, Australia, and New Zealand in a bid to focus on India. The result is a leaner but less ambitious Ola.

Strategic Reboot: Enter Ola Consumer

In August 2023, Bhavish Aggarwal unveiled a sweeping overhaul: Ola Cabs was rebranded to Ola Consumer, a move to unify the company’s disparate business verticals. The newly consolidated entity includes:

• Ride-hailing

• Cloud kitchens

• Financial services (like OlaMoney)

• Electric logistics (via Ola Electric)

The rebranding aims to project Ola as more than a mobility platform — a “super app” of sorts. However, the execution of this vision remains nascent, and early indicators suggest the core mobility business still drives the bulk of Ola’s revenue.

Meanwhile, Rapido Races Ahead

While Ola retrenched, Rapido sprinted forward. The company:

• Raised $200 million in a high-profile funding round

• Achieved unicorn status with a valuation of $1.1 billion

• Expanded into cabs and autos, quickly scaling its multi-modal offering

• Cut losses by 45% to ₹371 crore in FY24, signaling operational maturity

Rapido’s ability to scale while tightening its fiscal belt is winning investors over — and putting more pressure on Ola to defend its turf.

Credits: Entrackr

The IPO Conundrum: Is Ola Ready?

Despite becoming a public entity in November 2023, Ola has yet to take firm steps toward an IPO. The internal restructuring and financial cleanup hint at preparation, but with valuation slashed and market leadership in question, public market sentiment may be tepid unless Ola shows renewed growth.

IPO-bound firms usually need either explosive growth or strong brand equity — and Ola, at the moment, has neither in abundance.