Ather Energy IPO Secures Full Subscription in Final Hours with Strong Retail Support
Ather Energy's ₹3,000-crore initial public offering (IPO) managed to cross the finish line on Wednesday after a late surge in institutional demand pushed the issue into full subscription territory. The electric two-wheeler manufacturer's public offering closed with 1.5 times overall subscription, despite persistent concerns about valuation and weak grey market signals.
Subscription Details: Retail Investors Lead the Way
The subscription breakdown revealed interesting insights into investor sentiment toward this emerging EV player:
- Retail investors showed the strongest support, subscribing 1.89 times their allotted quota
- Qualified institutional buyers (QIBs) demonstrated significant interest in the final stretch, subscribing 1.76 times their allocation
- Non-institutional investors (NIIs) displayed more caution, subscribing to just 69% of their portion
This pattern suggests retail investors remain optimistic about the long-term prospects of India's electric mobility sector, while institutional participants made a calculated late-hour push that proved crucial for the IPO's success.
Grey Market Premium Shows Warning Signs
Despite achieving full subscription, warning signs persist in the grey market, where Ather's unlisted shares traded at ₹322—just ₹1 above the upper price band of ₹321. This minimal premium of 0.31% indicates tepid expectations for listing gains.
The Grey Market Premium (GMP) has steadily declined throughout the IPO period:
- Pre-issue: ₹7 premium
- Monday: ₹3 premium
- Tuesday: Approximately ₹1 premium
Market analysts attribute this decline primarily to broader market weakness last week, though some suggest sentiment could recover if equity markets stabilize in the coming days.
Offer Structure and Valuation
The IPO comprised two components:
- Fresh issue worth ₹2,626 crore
- Offer-for-sale (OFS) of ₹355 crore
At the upper price band of ₹321, Ather Energy is valued at approximately $1.4 billion—notably a 44% markdown from earlier fundraising targets. This significant valuation adjustment reflects the more cautious investor sentiment prevailing in the current global economic environment.
The company had already secured ₹1,340 crore from anchor investors before the public offering, with participants including prominent names like SBI Mutual Fund, Franklin Templeton, and the Abu Dhabi Investment Authority.
Planned Use of Proceeds
The Bengaluru-based electric scooter manufacturer has outlined several strategic initiatives for the IPO proceeds:
- Establishing a new manufacturing facility in Maharashtra
- Repaying existing borrowings
- Investing in research and development
- Enhancing marketing capabilities
- Other general corporate purposes
Mixed Analyst Recommendations
Investment experts remain divided on Ather Energy's prospects, offering varied recommendations:
Geojit Financial Services acknowledged valuation concerns but maintained a positive long-term outlook: "At the upper price band of ₹321, Ather's EV/Sales ratio of 7.1x (FY24) appears expensive. However, as a pioneer in the E2W segment and in a strong growth phase, we recommend a 'Subscribe' rating for high-risk investors with a long-term view."
Arihant Capital took a slightly more optimistic stance on near-term prospects: "At the upper band of ₹321, the issue is valued at an EV/Sales ratio of 8x, based on 9MFY25 sales of ₹1,579 crore. We are recommending a 'Subscribe for listing gain' rating."
Company Positioning and Background
Ather Energy has built its reputation on several distinctive aspects:
- Strong focus on in-house research and development
- Premium positioning in the electric two-wheeler market
- Recent portfolio expansion with the launch of the Ather Rizta
Among its early institutional backers, IIT Madras holds 15.58 lakh shares and is expected to realize approximately ₹50 crore from the listing. This connection to one of India's premier technical institutions adds credibility to the company's technological foundations.
The late surge in institutional interest that helped push the IPO across the subscription threshold demonstrates that while investors may have concerns about valuation in the current market environment, there remains substantial belief in Ather Energy's growth story and its position in India's expanding electric vehicle ecosystem.
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