Ather Energy's Rs 2,981-Crore IPO Opens For Subscription: Investment Analysis
The much-anticipated initial public offering (IPO) of premium electric two-wheeler manufacturer Ather Energy opened for subscription today, marking the first mainboard IPO of the fiscal year 2025-26. The company aims to raise approximately Rs 2,981 crore through this public issue, entering the growing list of EV manufacturers in India's public markets.
IPO Structure and Key Details
The Ather Energy IPO consists of two components:
- Fresh issue of 8.18 crore equity shares
- Offer for Sale (OFS) of 1.1 crore shares by existing shareholders
Under the OFS, company promoters Tarun Sanjay Mehta and Swapnil Babanlal Jain will partially divest their stakes. Other selling shareholders include Tiger Global, IIT Madras incubation cell, and several additional investors.
Essential IPO Information:
- Price Band: Rs 304-321 per share
- Grey Market Premium (GMP): Approximately 1% over the issue price
- Minimum Lot Size: 46 shares
- Book Running Lead Managers: Axis Capital, HSBC Securities, JM Financial, and Nomura Financial Advisory
Fund Utilization Strategy
The proceeds from the fresh issue will be strategically allocated across several key areas:
- Capital expenditure for establishing a new electric two-wheeler factory in Maharashtra
- Repayment of existing debt obligations
- Investments in research and development initiatives
- Marketing campaigns to strengthen brand presence
- General corporate purposes
Industry Position and Competition
Backed by automotive giant Hero MotoCorp, Ather Energy currently competes with recently-listed Ola Electric in the premium electric two-wheeler segment. The company has established itself as an early mover in India's EV market with its focus on technology-driven premium products.
The company's upcoming Factory 3.0 is expected to significantly boost production capacity from the current 420,000 units to approximately 1.42 million units by FY27, positioning Ather to capitalize on the projected market growth.
Market Outlook and Growth Strategy
According to the company's management, the electric two-wheeler market in India is projected to grow at an impressive 41-44% CAGR until FY31. Ather Energy aims to leverage this growth through:
- Expanding its product portfolio beyond current offerings
- Implementing cost reduction measures through localization and new battery technologies
- Increasing software monetization opportunities
The recent launch of the Ather Rizta has helped the company expand its customer base beyond the premium segment. Despite challenges from reduced government subsidies, the company has shown improvement in profitability metrics and decreased its dependence on subsidies.
Should Investors Subscribe?
Most market analysts are recommending a 'Subscribe' rating for the IPO, primarily for listing gains. Arihant Capital notes: "At the upper band of Rs 321, the issue is valued at an EV/sales ratio of 8x, based on 9MFY25 sales of Rs 1,579 crore."
Factors supporting a positive outlook include:
- Strong positioning in India's rapidly growing electric two-wheeler market
- Early-mover advantage with established brand presence
- Premium product positioning with higher margins
- Robust in-house R&D capabilities and technology ecosystem
- Capacity expansion plans aligned with projected market growth
However, investors should consider the relatively weak Grey Market Premium (GMP) of just 1%, which indicates cautious sentiment in the unofficial market ahead of listing.
Conclusion
With the electric vehicle revolution gaining momentum in India, Ather Energy's public offering represents a significant opportunity for investors looking to participate in the green mobility sector. While the company faces intense competition and regulatory challenges, its technology-focused approach, premium positioning, and expansion plans provide a solid foundation for potential growth.
Disclaimer: The views and investment tips expressed in this article are for informational purposes only and do not represent financial advice. The views expressed are those of the sources cited and not necessarily those of this website or its management. Investing in equities or other financial instruments carries the risk of financial loss. Readers must exercise due caution and conduct their own research before making any investment decisions. We are not liable for any losses incurred as a result of decisions made based on this article. Please consult a qualified financial advisor before making any investment.
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