Ather Energy IPO: 10 key risks investors should know before subscribing to the ₹2,981 crore-issue

Ather Energy IPO: Electric two-wheeler manufacturer Ather Energy Ltd is scheduled to start its public subscription from April 28 to April 30. The process for anchor investors will occur today (April 25). This will be the first major public offering in the current financial year (2025-26).

Ather Energy IPO includes a fresh issuance of equity shares valued at ₹2,626 crore, in addition to an Offer-For-Sale (OFS) of 1.1 crore equity shares from the promoters and other stakeholders. Ather Energy IPO price band has set a price range between ₹304 and ₹321 per share.

The company intends to use the funds raised to establish an electric two-wheeler manufacturing facility in Maharashtra and to reduce its existing debt. If the price is fixed at the upper limit of the range, the Ather Energy IPO size is projected to be ₹2,981 crore, which would bring the company's overall valuation to ₹11,956 crore.

This will be the second electric two-wheeler company looking to go public, following Ola Electric Mobility, which introduced its ₹6,145 crore IPO in August of last year.

Ather Energy IPO has designated 75 percent of the share offering for qualified institutional investors, 15 percent for non-institutional investors, and the remaining 10 percent for retail investors.

The lead managers for the Ather Energy IPO include Axis Capital, JM Financial, Nomura Financial Advisory and Securities (India), and HSBC Securities & Capital Markets. It is expected that the company’s shares will start trading on the stock exchanges on May 6.

Ather Energy IPO - Key Risks

1. Aside from the batteries produced internally, the company depends on its suppliers for all other components necessary for assembling their E2Ws in-house. A loss of key suppliers, or any refusal or failure on their part to deliver components to Ather Energy, could lead to disruptions in business operations.
2. Any interruptions in the availability, along with any modifications in the pricing and quality of lithium-ion cells, could significantly disrupt and negatively affect their business activities.
3. Ather Energy relies on imports from specific countries, including China, and such imports may face interruptions due to changes in government regulations or policies, worsening economic conditions, or increasing trade tensions.
4. The company's share of the Indian E2W market remained relatively stable, recorded at 10.7% and 11.5% for the nine months ending December 31, 2024, and for Fiscal Year 2024, respectively.
5. An allocation of ₹7,500 million from the net proceeds is planned for their research and development needs, representing a substantial share of the total funds anticipated to be raised from the Offer. There is no guarantee that this investment will proceed as envisioned, nor can they promise it will lead to the development of tangible assets or achieve the expected results or outcomes.
6. Ather Energy sales are primarily concentrated in South India, which exposes them to increased risks of business interruptions due to natural disasters, regional unrest, and regulatory changes within that area.
7. Given their operation within the highly competitive Indian automobile sector, the company may experience downward pricing pressure that could necessitate lowering the prices of their electric two-wheelers. A price decrease in their electric two-wheelers would shrink their profit margins, negatively impacting their business, prospects, and operational results.
8. If their electric two-wheelers fail to deliver the anticipated performance and quality, they might have to implement product recalls or other remedial measures.
9. In the nine months ending on December 31, 2024, the capacity utilization rates at their Hosur Factory were 39% for the electric two-wheeler assembly and 41% for the battery pack manufacturing lines. The low capacity utilization at the Hosur Factory could hinder their ability to capitalize on economies of scale.
10. They rely heavily on the contributions of Tarun Sanjay Mehta, Swapnil Babanlal Jain, other Senior Management members, and skilled personnel, and losing their services could disrupt their business operations.

Ather Energy IPO GMP today

Ather IPO GMP today or grey market premium is +5. This indicates Ather Energy share price were trading at a premium of ₹5 in the grey market, according to investorgain.com.

Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price of Ather Energy share price was indicated at ₹326 apiece, which is 1.56% higher than the IPO price of ₹321.

According to the grey market activities observed over the past four sessions, the IPO GMP is trending downwards today and is anticipated to decline further. The minimum GMP recorded is ₹5.00, while the maximum GMP noted is ₹17, according to experts from investorgain.com.

'Grey market premium' indicates investors' readiness to pay more than the issue price.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.