The electric vehicle (EV) market in India is buzzing with excitement as Ather Energy, a leading electric two-wheeler manufacturer, opened its initial public offering (IPO) for subscription on April 28, 2025. The IPO, which will remain open until April 30, aims to raise ₹2,981 crore through a combination of fresh equity and an offer for sale (OFS) by existing shareholders.
Ather Energy has set the price band for its shares between ₹304 and ₹321 per equity share, with a minimum bid lot size of 46 shares. This means that retail investors need to invest a minimum of ₹14,766 to participate in this public offering. The company is backed by Hero MotoCorp and competes with other players in the electric two-wheeler space, including Ola Electric.
As part of the IPO, Ather Energy plans to utilize the funds raised for various purposes, including capital expenditure for establishing a new electric two-wheeler factory in Maharashtra, repayment of debt, investment in research and development, and marketing initiatives. According to the company’s Red Herring Prospectus (RHP), the IPO comprises a fresh issue of 81.80 million equity shares and an OFS of up to 11.05 million equity shares from its promoters, Tarun Sanjay Mehta and Swapnil Babanlal Jain, as well as other shareholders like Tiger Global and the IIT Madras incubation cell.
In the lead-up to the IPO, Ather Energy secured ₹1,340 crore from anchor investors, showcasing strong institutional interest in the offering. Notable anchor investors include the Abu Dhabi Investment Authority, Franklin Templeton, and Morgan Stanley, among others.
Despite the enthusiasm surrounding the IPO, the grey market premium (GMP) for Ather Energy shares has seen fluctuations. As of April 28, 2025, the GMP is around ₹3, indicating a slight premium over the issue price, down from a higher ₹20 premium earlier in the week. This decline has raised questions about the expected listing gains for investors.
Brokerage firms have mixed views on whether investors should subscribe to the Ather Energy IPO. Arihant Capital has given a 'Subscribe for listing gain' rating, citing Ather's strong position in India's rapidly growing electric two-wheeler market. They emphasize the company's early-mover advantage, premium product positioning, and robust R&D ecosystem. The firm noted that Ather's recent launches, particularly the Ather Rizta, have helped expand its customer base significantly.
Moreover, Ather's upcoming Factory 3.0 is expected to increase production capacity from 420,000 to 1.42 million units by FY27, which could further bolster the company’s growth prospects. "At the upper band of ₹321, the issue is valued at an EV/sales ratio of 8x, based on a 9MFY25 sales of ₹1,579 crore. We are recommending a Subscribe for listing gain rating for this issue," noted Arihant Capital.
On the other hand, Bajaj Broking has taken a more cautious approach, recommending that only well-informed investors with surplus funds consider the IPO for long-term investment. They pointed out that Ather Energy has been consistently posting losses and carries significant accumulated debt, which stood at over ₹1,121 crore as of December 31, 2024. The firm emphasized that while Ather Energy benefits from strong backing, its financials raise concerns.
Ventura Securities has also recommended a 'Subscribe for listing gains' rating, citing Ather's focus on premium products and ongoing investments in R&D. They highlighted that the company is undergoing significant capital expenditure with its Ather Factory 3.0, which is set to have a capacity of 10 lakh units by mid-FY26. This development comes despite challenges such as subsidy cuts and low-capacity utilization.
Meanwhile, Nuvama Institutional Equities, after meeting with Ather’s management, noted that the company is focusing on expanding its product range with two new platforms—EL (for scooters) and Zenith (for motorcycles)—to tap into a broader market. They also pointed out that Ather's sales are heavily concentrated in the South, which accounted for 61% of its sales in 9MFY25, indicating potential for growth in other regions.
As the subscription window for Ather Energy’s IPO closes on April 30, investors are left weighing the potential risks and rewards of investing in this electric two-wheeler manufacturer. The allotment of shares is expected to be finalized on May 2, 2025, with shares slated to list on the NSE and BSE on May 6, 2025.
In conclusion, while the Ather Energy IPO presents an opportunity to invest in a growing sector, potential investors should carefully consider the company's financial health and the current market conditions before making their investment decisions.
