Ather Energy Prepares for IPO Launch

Ather Energy Ltd, a prominent player in the electric two-wheeler sector, is set to open its public subscription from April 28 to April 30. This marks the first significant public offering in the 2025-26 fiscal year. Anchor investors will have the opportunity to participate starting today, April 25. With a fresh equity issuance valued at ₹2,626 crore and a simultaneous offer for sale (OFS) of 1.1 crore equity shares from stakeholders, this IPO is generating substantial interest.

IPO Details and Financial Goals

The price band for the Ather Energy IPO is established between ₹304 and ₹321 per share. The funds raised are earmarked for establishing a new electric two-wheeler manufacturing facility in Maharashtra and reducing the company’s debt load. If shares are priced at the upper limit, the total size of the IPO could reach ₹2,981 crore, elevating the company’s valuation to ₹11,956 crore.

This IPO follows Ola Electric Mobility, which launched a ₹6,145 crore IPO in August of the previous year, making Ather Energy the second electric two-wheeler firm to seek public investment.

Share Allocation and Management

In terms of share distribution, 75% is allocated for qualified institutional investors, 15% for non-institutional investors, and 10% for retail investors. The lead managers overseeing this IPO include Axis Capital, JM Financial, Nomura Financial Advisory and Securities (India), and HSBC Securities & Capital Markets. Trading on stock exchanges is anticipated to commence on May 6.

Risks to Consider for Investors

While Ather Energy has developed some of its battery technology in-house, it remains dependent on external suppliers for other critical components. Any disruption in the supply chain could significantly impact operations. Key risks include:

• Supplier Dependency: Reliance on suppliers for parts, which could disrupt production if they fail to deliver.
• Import Vulnerabilities: The company imports components from countries like China, which may be affected by regulatory changes or geopolitical tensions.
• Market Stability: Ather holds a 10.7% to 11.5% market share in the Indian electric two-wheeler sector, which could be vulnerable to economic shifts.

Research and Development Focus

A significant portion of the proceeds, around ₹7,500 million, is allocated for research and development. However, there are no guarantees this investment will yield the expected advancements or products.

Sales are predominantly concentrated in South India, exposing Ather Energy to risks such as natural disasters and regional unrest. Additionally, the competitive nature of the Indian automobile market may lead to pricing pressures, potentially affecting profit margins if consumer demand shifts.

Current Grey Market Performance

As of today, the Ather IPO’s grey market premium (GMP) stands at +5, indicating shares are anticipated to trade at a ₹5 premium in the grey market. This suggests a potential listing price of ₹326 per share, reflecting a 1.56% increase over the upper IPO price. However, market experts note that the premium has been trending downward, with fluctuations observed in recent sessions.

This IPO presents an exciting opportunity for investors looking to tap into the growing electric vehicle market, but potential investors should remain aware of the associated risks. For more insights on Ather Energy’s IPO and its implications, stay tuned to our updates.