Ather Energy, a prominent player in the electric two-wheeler market, is gearing up for a significant milestone with its Initial Public Offering (IPO) scheduled for April 28, 2025. As one of India’s largest IPOs this year, it arrives amid a backdrop of market volatility driven by macroeconomic factors. According to Nuvama Institutional Equities, Ather is poised to become a major player in the burgeoning electric vehicle (EV) sector.

Ather Energy’s Strategic Expansion Plans

In its efforts to broaden its reach, Ather Energy is introducing two innovative platforms: EL for scooters and Zenith for motorcycles. This strategic move is expected to enhance the company’s market presence significantly.

• Current Sales Landscape: Notably, 61% of Ather’s sales over the first nine months of FY25 originated from southern India.
• Geographical Diversification: The company is now setting its sights on expanding beyond southern regions, which could unlock new customer bases.

To support this growth, Ather is ramping up production capacity at its new facility in Maharashtra.

• Initial Capacity Increase: The first phase will add 0.5 million units, with plans to eventually scale to 1 million units.
• Total Capacity: Once fully operational, Ather’s production capacity is projected to reach 1.42 million units.

Financial Insights on the IPO

The proposed IPO is priced between Rs 301 and Rs 321 per share, with the overall issue valued at approximately Rs 2,980 crore. This includes a fresh issue of Rs 2,630 crore and an offer for sale amounting to Rs 350 crore.

Allocation of IPO Proceeds

Nuvama reported that the capital raised will be strategically allocated, with a focus on:

• New Plant Development: Rs 970 crore
• Research and Development: Rs 750 crore
• Marketing Expenses: Rs 300 crore
• Debt Repayment: Rs 40 crore

Ather Energy’s revenue for the first nine months of FY 2024-25 has reached Rs 1,580 crore, with an annualized valuation of 6x price-to-sales (P/S) at the upper end of the IPO spectrum, estimating the company’s total valuation at Rs 11,960 crore.

Cost Management and Operational Efficiency

Another noteworthy aspect highlighted by Nuvama is Ather’s commitment to cost reduction. The company’s gross margin improved significantly, rising from 7% in FY24 to 17% in the first nine months of FY25.

• Cost Reduction Strategies: Ather achieved a 31% reduction in the bill of materials (BOM) for its Ather 450X (2.9 kWh) model.
  • Electronics: 18%
  • Mechanical Components: 6%
  • Battery Parts: 7%

Additionally, warranty costs per unit have also seen a substantial decrease year-over-year:

• FY23: 29% reduction
• FY24: 37% reduction
• 9MFY25: 32% reduction

These improvements underscore Ather’s commitment to product reliability through rigorous testing and quality control.

In summary, Ather Energy’s upcoming IPO and its strategic initiatives signal a robust future in the electric vehicle landscape, positioning it well to capitalize on the growing demand for sustainable transportation solutions.