April 24, 2025
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Why should you apply in the IPO of loss making Ather Energy?
Ather Energy IPO to Hit the Market on April 28, 2025
After a prolonged lull in the IPO market, Ather Energy is set to launch its Initial Public Offering on April 28, 2025. In response to subdued market sentiment, the company has revised and reduced the size of its IPO.
Initial grey market activity showed a premium of Rs.17, which has now declined to around Rs.6–Rs.7, reflecting cautious investor sentiment. A key concern among analysts and investors is the company’s financial track record—Ather Energy has reported losses over the past three financial years, raising questions about the IPO’s valuation.
With a price of Rs. 321 at the upper band, many believe the offering is aggressively priced. There is growing apprehension that the grey market premium may turn negative post-subscription, and uncertainty looms over the stock’s listing performance.
Amidst such thinking, it is necessary to evaluate the IPO in depth and arrive at the correct decision.
The Company was founded by Tarun Sanjay Mehta and Swapnil Babanlal Jain in 2013, with a focus on product and technology development in India in order to build an E2W ecosystem. And at present it is a pioneer in the Indian electric two-wheeler (“E2W”) market.
It is a pure play EV company that sells E2Ws and the associated product ecosystem, comprised of its software, charging infrastructure and smart accessories, all of which are conceptualised and designed by it in India. Along with battery packs which are manufactured in-house, other key E2W components, such as motor controllers, transmissions, vehicle control units, dashboards, DC-DC converters, harnesses, and chassis are designed in-house and outsourced to suppliers for manufacturing. It also developed all components of the Atherstack software that powers its products in-house.
The company has sold 107,983 and 109,577 E2Ws in the nine months ended December 31, 2024 and Fiscal Year 2024, respectively. According to the CRISIL Report, it is the third and fourth largest player by volume of E2W sales in Fiscal Year 2024 and the nine months ended December 31, 2024, respectively.
Its current E2W portfolio comprises two product lines – the Ather 450 line, which caters to customers seeking performance scooters, and the Ather Rizta line, which is targeted at customers seeking convenience scooters for their family.
According to the CRISIL Report, it is the first two-wheeler (“2W”) OEM to establish a 2W fast charging network, the Ather Grid, in India.
The company has a vertically integrated approach to the design of its products and key technologies.
The company assembles its E2Ws and manufacture ots battery packs using lithium-ion cells sourced from suppliers at its manufacturing facilities located near Hosur, Tamil Nadu, India. At the Hosur Factory, it had a total annual installed capacity of 420,000 units for E2Ws and 379,800 units for battery packs as of December 31, 2024. Now it is in the process of building the first phase of its Factory 3.0 in Chhatrapati Sambhajinagar (formerly Aurangabad), Maharashtra, India to expand its total installed production capacity to 1.42 million E2Ws upon completion of phase two. It operates an asset-light distribution model comprising experience centres and service centres operated by its third-party retail partners in India and through authorised distributors in Nepal and Sri Lanka. As of December 31, 2024, it had 265 experience centres and 233 service centres in India, five experience centres and four service centres in Nepal, and ten experience centres and one service centre in Sri Lanka.
Total Addressable Market(TAM)
India was the largest motorised 2W market by volume in the world in CY2023. Total domestic sales in Fiscal Year 2024 was 18.4 million units. In the nine months ended December 31, 2024, the India 2W market recorded sales of 15.3 million units, positioning itself for sustained growth in Fiscal Year 2025. This performance marks a 11% year-on-year increase compared to the nine months ended December 31, 2023. The Indian 2W market is expected to further grow at a CAGR of approximately ~7% between Fiscal Years 2024 and 2031 to reach a market size of 29 to 30 million in Fiscal Year 2031. In Fiscal Year 2024, E2W penetration rose to 5.1% and EV penetration in the scooter segment increased to 14.7%.
Moreover, with India being one of the largest 2W domestic markets globally, it has a unique opportunity to leverage its domestic market scale and manufacturing competitiveness for the export market. This, together with the industry-wide trend of electrification afford Indian E2Ws an opportunity to amass a larger share of the global 2W market. The global 2W market is expected to reach 80 to 82 million units by 2029.
The company’s r business model is founded on four key pillars: (i) our vertically integrated approach to design, (ii) its software-defined ecosystem, (iii) its premium positioning, and (iv) its capital efficient approach to business operations across the value chain. Its products are focused on quality and user experience, and are positioned at a premium price within their respective segments in the Indian E2W market.
The company operates an asset-light distribution model primarily comprising experience centres and service centres operated by third-party retail partners. According to the CRISIL Report, unavailability and slow development of charging infrastructure are barriers to the adoption of EVs in India. To address this issue, the company has designed a comprehensive set of charging solutions for charging at home and on-the-go.
Key Operational and Financial Highlights of Ather Energy
In the first nine months of FY 2024–25, Ather Energy has demonstrated notable operational progress:
- Sales Volume: The company sold 1,08,000 units, marking a 48% period-on-period growth.
- Revenue from Operations: Revenue reached Rs.1,589 crore, reflecting a 28% growth over the same period last year.
- Adjusted Gross Margin: Improved significantly to 19%, up from 9% in the comparable previous period.
- Net Loss: Narrowed to Rs.577.90 crore for the nine months ended December 31, 2024, compared to Rs.776.40 crore in the same period last year.
- Material Costs: The cost of materials consumed dropped to 82% of revenue, compared to 92% in the previous year.
- Financial Position: Key ratios such as the debt-equity and current ratio indicate a healthy and stable financial position.
Future Outlook
Given the improving financial trajectory, the company is expected to achieve cash breakeven by FY 2026–27, and report net profits post-depreciation by FY 2027–28.
Valuation and Listing Expectations
Taking Ola Electric’s market cap-to-sales ratio of 4.61 as a benchmark and based on Ather’s estimated total income for FY 2024–25, the post-IPO market capitalization is projected in the range of Rs.11,225 crore to Rs.12,300 crore.
Accordingly, the IPO shares are expected to list between Rs.321 and Rs. 330.
Investment Perspective
For long-term investors, the stock holds strong potential. Based on current projections, the share price could reach Rs. 422 within the next 12 months, offering a potential return of 31% from the upper price band.
Guidance: Must apply as long term investment
Analysis & guidance by Paresh Gordhandas, CA & Sebi registered research analyst
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