Ather Energy is gearing up to make a splash in the primary market this month with its eagerly anticipated initial public offering (IPO) after a two-and-a-half-month hiatus. The electric scooter pioneer, based in Bengaluru, submitted a draft red herring prospectus to the Securities and Exchange Board of India (SEBI) on April 22. This IPO is expected to attract significant attention as it aims to position itself prominently within the electric two-wheeler (E2W) sector.
Ather Energy IPO Price Details
The price range for the Ather Energy IPO has been established between ₹304 and ₹321 per equity share, with a nominal face value of Re 1. Notably, the allocation of shares for anchor investors is anticipated to occur on April 25. The company hopes to deliver impressive returns for backers such as Tiger Global and NIIF, focusing on the design, development, and assembly of electric scooters, battery systems, charging infrastructure, and related software innovations.
Key Insights from the IPO
- Major Stakeholder: Hero MotoCorp, holding approximately 40% ownership, will retain its shares and not participate in the IPO divestment.
- Grey Market Premium: As of now, the Ather Energy IPO grey market premium is +7, indicating that shares are trading at a ₹7 premium in the grey market, suggesting a potential listing price of around ₹328 per share, which is about 2.18% higher than the upper end of the IPO price band.
- Market Trends: Recent grey market trends show a decline in the IPO GMP, with experts noting a fluctuation between ₹7 and ₹17.
Understanding Ather Energy’s Business Model
Ather Energy has carved out a niche for itself as a fully integrated electric vehicle manufacturer with a focus on innovation. The company’s business model is built on four core pillars:
- Comprehensive Design: A holistic approach to the design process.
- Software Ecosystem: A focus on creating a software-driven ecosystem.
- Premium Positioning: Aiming for a high-end market presence.
- Capital Efficiency: Strategic use of capital across operations.
Ather Energy’s Manufacturing and Product Offerings
The manufacturing of Ather’s electric vehicles occurs at their facility in Hosur, Tamil Nadu, which boasts an annual capacity of 420,000 electric vehicles and 379,800 battery packs as of March 2024. Their E2W lineup includes two primary series:
- Ather 450 Series: Focusing on performance.
- Ather Rizta Series: Designed for family convenience, it offers features such as 56 liters of storage and Alexa voice command integration.
Market Landscape and Future Prospects
India remains the largest market for motorized two-wheelers worldwide, with domestic sales reaching 18.4 million units in FY2024. The Indian two-wheeler market is expected to grow at a CAGR of 7% from FY2024 to FY2031, potentially reaching a size of 29 to 30 million units by 2031.
Financial Performance and Risks
Ather Energy reported a pre-tax loss of ₹1,059.7 crore for FY24, an increase from ₹864.5 crore in FY23. Revenue for FY24 was ₹1,753.8 crore, down from ₹1,780.9 crore in the previous fiscal year.
Key Risks for investors include:
- Reliance on external suppliers for critical components.
- Challenges in attracting customers could hinder financial stability.
- Potential removal or reduction of government incentives impacting demand.
Conclusion
With the Ather Energy IPO set to open on April 28, investors are keenly observing the developments surrounding this high-profile offering. The company’s innovative approach and strong market position could make it a compelling option for those looking to invest in the burgeoning electric vehicle sector. Stay tuned for more updates as the IPO date approaches!
