Ather Energy IPO Opens For Subscription Today: Should You Invest?

Ather Energy IPO Today: Electric two-wheeler maker Ather Energy has opened its Initial Public Offering (IPO) for public subscription today, April 28, and the issue will close on April 30. The company is aiming to raise around Rs 2,981 crore, with a price band set between Rs 304 and Rs 321 per share.

Ather has already secured Rs 1,340 crore from major anchor investors like Franklin Templeton, Abu Dhabi Investment Authority, and Morgan Stanley. The company's shares are expected to list on the stock exchanges on May 6.

The IPO consists of a fresh issue worth Rs 2,626 crore and an Offer-for-Sale (OFS) of shares by the promoters and early investors, such as Tiger Global and IIT Madras incubation cell.

The funds raised will primarily be used to set up a new manufacturing facility in Maharashtra and reduce existing debt.

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Strengths of Ather Energy

• Ather Energy has a strong focus on innovation and R&D, with nearly 50% of its workforce dedicated to research. It has introduced several firsts in India’s electric scooter market, including touchscreen dashboards, fast-charging technology, and smart helmets.
• The company has built a connected ecosystem through Atherstack, which supports features like Trip Planner and Over-The-Air (OTA) updates, helping boost customer loyalty and margins.
• Additionally, Ather follows a capital-efficient business model by outsourcing non-core manufacturing while retaining control over key intellectual property.
• It has an asset-light distribution network by partnering with retail outlets, enabling faster expansion with lower costs.

Risks to Consider

• While Ather shows strong promise, there are risks investors must be aware of. The company depends heavily on imports from China, Hong Kong, Singapore, and South Korea for critical parts.
• According to market analysts, any supply disruptions could impact production. Also, 61% of Ather’s sales come from South India, meaning regional issues could disproportionately affect the company.
• Financially, Ather is still loss-making and has reported negative cash flows in recent years. It also faces heavy competition in the electric two-wheeler space.
• Further, Ather is involved in litigation cases totalling Rs 116 crore, which could impact its finances if outcomes are unfavourable.
• The company also has a reliance on two main manufacturing plants in Tamil Nadu, posing an operational risk.

Should You Buy or Not?

Arihant Capital has assigned a "Subscribe for listing gain" rating for the IPO, noting that at the upper band of Rs 321, the issue is valued at an EV/sales ratio of 8x, based on a 9MFY25 sales of Rs 15,789 million. 

Meanwhile, Bajaj Capital recommends subscribing to the IPO with a long-term perspective, highlighting its potential for sustained growth. Both firms suggest positive prospects for investors, with Arihant focusing on short-term gains and Bajaj emphasising long-term value.

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