Ather Energy IPO: Should You Subscribe to the Rs 2,981-Crore Issue? Analysts Share Their Views
The much-anticipated Ather Energy IPO worth Rs 2,981 crore is set to open on April 28, 2025, and close on April 30, 2025, as the electric two-wheeler (E2W) giant steps into the public market.
- The issue consists of a fresh issue of 8.18 crore shares valued at Rs 2,626.30 crore, and an Offer for Sale (OFS) of 1.11 crore shares worth Rs 354.76 crore.
- The IPO offers investors a fresh opportunity to bet on India’s fast-growing EV two-wheeler segment.
Ather Energy’s Business Model and Strategic Focus
In an exclusive interaction with Zee Business, founder Tarun Mehta and CFO Sohil Parekh detailed the company’s unique positioning and operational strategy.
- Premium Product Focus: Ather initially targeted premium customers, achieving a 15–20% market share in southern India.
- Expansion Beyond South India: With the launch of the Rizta family scooter across Gujarat, Rajasthan, Maharashtra, and Madhya Pradesh, Ather has expanded significantly, although its overall market share currently stands at around 11%.
Hero MotoCorp’s Role in Ather Energy
While Hero MotoCorp holds a substantial equity stake, Ather Energy maintains operational independence, according to Mehta.
- No Operational Overlap: Hero MotoCorp acts purely as an investor and has no role in day-to-day management, ensuring Ather’s strategic autonomy.
Reduction in Subsidy Dependence
The company’s reliance on government subsidies has declined sharply over recent years, according to CFO Sohil Parekh.
- Subsidy Trend: Subsidy income dropped from Rs 500 crore in FY23 to Rs 270 crore in FY24, with only Rs 100 crore booked in the first nine months.
- Revenue Mix: Subsidies now form only 7% of the company’s total revenues, thanks to cost control, engineering innovations, and operational efficiencies.
Profitability Outlook: Signs of Turnaround
Tarun Mehta highlighted substantial improvements in the company’s profitability metrics over the past year.
- Gross Margin Growth: Margins surged from 9% to 19%, driven by a 31% reduction in material costs through strategic engineering.
- Future Growth Catalysts: Key drivers include the introduction of cheaper LFP batteries, cost-efficient scooter platforms, and a new high-efficiency factory.
- Retail Expansion: Ather plans to expand its store network from 260–270 stores currently to levels closer to 700–800 stores, offering considerable growth potential.
Although Ather remains loss-making for now, these strategic initiatives are aimed at achieving positive cash flows and sustainable profitability.
Ather Energy IPO Key Details
Issue Structure:
- Fresh issue of 8.18 crore shares and OFS of 1.11 crore shares.
Price Band:
- The IPO price band is set between Rs 304 and Rs 321 per share.
Utilization of Proceeds:
- Rs 927.2 crore for a new manufacturing facility in Maharashtra.
- Rs 40 crore allocated for debt repayment.
- Rs 750 crore earmarked for R&D initiatives.
- Rs 300 crore dedicated to marketing and promotional activities.
Allocation Split:
- 75% to Qualified Institutional Buyers (QIBs),
- 15% to Non-Institutional Investors (NIIs),
- 10% to retail investors,
- Special discount of Rs 30 per share for employees (up to 1 lakh shares).
Ather Energy IPO Timeline and Listing
Key dates to track:
- Allotment: Expected on May 2, 2025.
- Refunds and Credit: Processed by May 5, 2025.
- Listing: Scheduled for May 6, 2025 on BSE and NSE.
Leading Managers and Registrar
Book-Running Lead Managers (BRLMs):
- Axis Capital Limited
- HSBC Securities & Capital Markets (India)
- JM Financial Limited
- Nomura Financial Advisory and Securities (India)
Registrar:
- MUFG Intime India Pvt Ltd (formerly Link Intime).
Should You Subscribe to the Ather Energy IPO?
Domestic brokerage firms are divided on the attractiveness of this offering.
- SBI Securities: They recommend an “Avoid” stance, citing Ather’s lack of profitability at both EBITDA and PAT levels, and advise a post-listing review.
- Ventura Securities: They suggest subscribing for potential listing gains, pointing to Ather’s improving fundamentals and EV sector tailwinds.
While Ather Energy’s IPO presents an opportunity to invest in a leading EV brand with strong growth levers, caution is warranted due to the current loss-making status and market competition. Investors should align their decisions with their risk appetite and investment horizons.