Bengaluru’s Ather Energy, a prominent player in the electric two-wheeler market, has announced an attractive price range of Rs 304 to Rs 321 for its upcoming initial public offering (IPO). This IPO will include a fresh issue valued at Rs 2,626 crore and an offer for sale of up to 11 million shares. Should the IPO reach the upper limit of the price band, it could potentially secure a total of Rs 2,981 crore, elevating the company’s valuation to nearly Rs 12,000 crore.
A Strategic Move for Growth
Interestingly, Ather Energy has opted to downsize its offer, signaling that investors are optimistic about the company’s future expansion. This IPO marks a significant step as Ather becomes the second electric two-wheeler manufacturer to enter the public market, following Ola Electric Mobility, which launched a substantial Rs 6,145 crore IPO in August 2022.
Positive Growth Indicators
Tarun Mehta, CEO of Ather Energy, highlighted the company’s robust performance in FY25, attributing its growth to stable subsidies and favorable government policies. He remarked, “Our total income has seen a healthy increase over the past three quarters, and the real highlight is the growth in our adjusted gross margins, which have surged from 9% to 19%."
- IPO Subscription Dates: The offer opens for retail investors from April 28 to April 30, marking the first IPO since February when many firms postponed their plans amid market fluctuations.
Adjustment in Offer Size
The Red Herring Prospectus (RHP) reveals a significant adjustment, reducing the offer for sale from 22 million shares to 11 million shares, reflecting the company’s optimistic outlook and investor confidence. Ashish Nigam, Managing Director of investment banking at Axis Capital, emphasized that the business has achieved remarkable success since the draft prospectus was filed, indicating a strong market response.
Future Market Potential
Mehta, who plans to sell 9.8 lakh shares, remains confident about the industry’s growth trajectory. He noted, “The market for electric two-wheelers will expand significantly. We are aware of the challenges regarding battery range and charging time, but we are committed to overcoming these obstacles to meet our growth targets.”
Focus on Core Competencies
Furthermore, Mehta expressed caution about excessive capital expenditure in a rapidly evolving sector, stating, “We believe that our resources are best allocated towards product innovation, technology advancements, and building our brand rather than overextending in manufacturing.” He clarified that Ather Energy is primarily focusing on battery technology, which they possess strong intellectual property in, while avoiding extensive vertical integration in other manufacturing areas.
Use of IPO Proceeds
The funds raised from this IPO will be strategically utilized for:
- Financing Phase 1 of the E2W Factory 3.0 in Sambhajinagar, Maharashtra
- Repaying or prepaying certain borrowings
- Investing in research and development
- Funding marketing initiatives
- General corporate purposes
As Ather Energy moves forward with its IPO, it positions itself not just as a manufacturer but as a key player in the future of sustainable transportation in India.
