Ather Energy's Rs 2,981-Crore IPO: Should You Invest Despite Weak GMP?

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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Ather Energy IPO: EV Maker Raises ₹1,340 Crore From Anchor Investors Ahead of ₹2,981 Crore Public Issue

Ather Energy IPO: Hero MotoCorp-Backed EV Maker Secures ₹1,340 Crore From Anchor Investors

Electric two-wheeler manufacturer Ather Energy Ltd has successfully raised ₹1,340 crore from anchor investors ahead of its initial public offering (IPO), marking a significant milestone for the Hero MotoCorp-backed company as it prepares to launch the first mainboard public issue of the 2025-26 financial year.

Strong Anchor Investor Interest

On Friday, April 25, Ather Energy announced it had allocated 4.17 crore shares to 36 funds at ₹321 per share, which represents the upper end of the IPO price band. This pre-IPO fundraising demonstrates robust institutional investor confidence in the electric vehicle manufacturer's growth prospects.

The anchor book features an impressive lineup of global and domestic investors, including:

• International financial institutions: Custody Bank of Japan, Franklin Templeton, Abu Dhabi Investment Authority, Eastspring Investments, Morgan Stanley Investment Management, and Societe Generale
• Domestic mutual funds: PSBI Mutual Fund, Aditya Birla Sun Life MF, ICICI Prudential MF, Invesco MF, ITI MF, and Union MF
• Insurance companies: Aditya Birla Sun Life Insurance

IPO Structure and Valuation

The upcoming public issue, valued at ₹2,981 crore, comprises a fresh issue of equity shares worth ₹2,626 crore and an offer-for-sale (OFS) of 1.1 crore equity shares by existing shareholders. The IPO price band has been set between ₹304 and ₹321 per share.

At the upper price band, Ather Energy's overall valuation is pegged at ₹11,956 crore, positioning it as a significant player in India's rapidly expanding electric vehicle market. The public subscription period will run from April 28 to April 30, 2025, with equity shares expected to list on stock exchanges by May 6, 2025.

Fund Utilization Plans

Ather Energy has outlined clear objectives for utilizing the IPO proceeds, focusing on expansion and financial stability:

• Establishing a new electric two-wheeler manufacturing facility in Maharashtra
• Reducing existing debt to strengthen the company's balance sheet
• Supporting ongoing research and development initiatives

The company recently announced the expansion of its R&D and testing capabilities at its product testing & validation center, underscoring its commitment to innovation in the electric mobility sector.

IPO Reservation Structure

The electric two-wheeler manufacturer has structured its offering to ensure broad market participation:

• 75% of the issue reserved for qualified institutional buyers (QIBs)
• 15% of the issue allocated for non-institutional investors
• 10% of the issue set aside for retail investors

Second Major E2W IPO

Ather Energy's public offering follows Ola Electric Mobility's ₹6,145-crore IPO in August 2024, making it the second major electric two-wheeler company to seek public listing in India. Ola Electric's offering had included a fresh issue of up to ₹5,500 crore and an OFS of up to 8.5 crore equity shares.

This trend highlights the growing investor interest in India's electric vehicle sector, which has seen significant expansion amid government incentives, rising fuel costs, and increasing environmental consciousness among consumers.

Corporate Backing

As a company backed by automotive giant Hero MotoCorp and global investment firm Tiger Global, Ather Energy brings substantial industry expertise and financial support to its public offering. This backing has helped the company develop its manufacturing capabilities and distribution network across India.

IPO Management

The book-running lead managers for Ather Energy's IPO include Axis Capital, JM Financial, Nomura Financial Advisory and Securities (India), and HSBC Securities & Capital Markets. These financial institutions will oversee the public offering process and coordinate with investors and regulatory authorities.

As India's electric vehicle market continues to evolve rapidly, Ather Energy's IPO represents a significant opportunity for investors to participate in the country's green mobility transition. The company's focus on premium electric two-wheelers has positioned it as a notable player in a segment with substantial growth potential.

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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