The much-anticipated Ather Energy IPO has officially opened for subscription today, April 28, 2023, capturing the attention of investors in the electric vehicle (EV) sector. With a price range set between Rs 304 and Rs 321 per share, many are left wondering if this offering is a smart investment. While some analysts express confidence in Ather Energy’s long-term prospects, others caution against its lofty valuation and current financial hurdles.
Ather Energy IPO Details
The public offering for Ather Energy launched today, with bids accepted until April 30. For those interested in purchasing shares, the final allotment is scheduled to be revealed on May 2, and the stock is anticipated to debut on the BSE and NSE on May 6.
However, the initial subscription figures tell a different story. As of the first day, the IPO has been subscribed only 0.04 times overall. Breaking it down further, the retail portion has seen a subscription rate of 0.21 times, while both the Qualified Institutional Buyer (QIB) and Non-Institutional Investor (NII) segments show minimal interest.
Insights from Brokerages on Ather Energy IPO
What are the expert opinions regarding the Ather Energy IPO? Let’s explore the perspectives of various brokerages.
Deven Choksey Research: Caution Advised
Deven Choksey, a prominent name in the brokerage industry, has adopted a skeptical view on Ather Energy’s IPO. The firm recognizes the company’s innovative capabilities but warns that the road to profitability is filled with obstacles.
Choksey’s report highlights, “Ather Energy stands out as a leader in the electric two-wheeler market, showcasing significant growth potential. However, the current valuation at a 6x EV/Sales multiple is excessive when compared to established competitors like TVS Motor (3.5x) and Bajaj Auto (5.4x). This high valuation may not warrant an investment at this point.”
Despite the company’s upcoming innovations, such as the “Rizta” and “EL platform,” Choksey advises investors to hold off on participating in the IPO for now. He further suggests that they might find better buying opportunities in the secondary market.
Geojit: A High-Risk Long-Term Investment
Conversely, Geojit offers a more optimistic yet still cautious viewpoint. The brokerage emphasizes Ather Energy’s growth trajectory and commitment to research and development as assets for future performance.
“Although the EV/Sales ratio appears steep, Ather Energy’s pioneering status in the electric two-wheeler market positions it well for growth,” notes the Geojit report. “However, due to profitability concerns and valuation issues, we recommend this IPO primarily for high-risk investors with a long-term outlook.”
Geojit also highlights potential risks, such as dependency on suppliers for critical EV components and the possibility of supply chain disruptions, particularly from China. “Any interruption in the supply of lithium-ion cells could adversely affect Ather’s operations,” they caution.
Bajaj Broking: Financial Concerns Persist
Bajaj Broking takes a closer look at Ather Energy’s financial standing. According to their findings, the company has consistently recorded losses, reporting a staggering Rs 1,059.7 crore net loss in FY24 and Rs 577.9 crore for the first nine months of FY25.
The report states, “While Ather Energy is making efforts to expand its manufacturing capabilities, its financial health remains a concern.” The brokerage points out that negative earnings per share (EPS) and return on net worth (RoNW) reflect ongoing financial struggles, suggesting that this IPO may be more suited for long-term investment strategies given its accumulated losses and high debt levels.
Conclusion
As the Ather Energy IPO unfolds, investors are faced with mixed reviews from various brokerages. While the company holds significant promise in the electric vehicle market, cautious sentiments regarding its valuation and financial performance loom large. Those considering investing in this IPO should weigh the insights from industry experts and assess their risk appetite before making a decision.
