Ather Energy IPO Day 1 Highlights: Issue subscribed 16% so far, retail booked 63%; check GMP and other details

Ather Energy IPO witnessed a subdued demand on the first day of the book-building process, garnering only 16% bids. The non-institutional investor (NII) portion was subscribed 0.16 times while the retail investor portion garnered 0.63 times bids. The Qualified Institutional Buyers portion did not see any bids yet. Lastly, the portion reserved for employees was booked 1.78 times.

India is the largest global motorised two-wheeler (2W) market by volume, with 18.4 million units sold in FY2024, of which 16% were exports. In the nine months ended December 31, 2024, exports accounted for 17% of overall 2W sales in India.

There is an increasing preference for premium vehicles within the 2W industry, reflected in the rising market share of motorcycles and scooters with engine capacities of 125 cc and above between FY2019 and FY2024.

The launch of electric vehicles (EVs) at competitive prices, coupled with advanced features, is accelerating electric two-wheeler (E2W) growth. E2W sales are expected to reach approximately 10.3 to 12.3 million units by FY2031.

This growth is being driven by:

• A sharp increase in EV launches
• Favourable government policies and continued incentives
• Rapid infrastructure development
• Falling battery prices
• Strengthening of the local value chain

These trends of electrification and premiumisation present significant domestic and international opportunities for E2W manufacturers.

The issue is a mix of an Offer for Sale (OFS) of up to 1,10,51,746 equity shares, totaling ₹354.76 crore, and a fresh issue of up to 8,18,06,853 equity shares, totaling ₹2,626 crore. The objective of the issue is to meet the capital expenditure incurred by the company for:

• E2W factory – ₹927 crore
• Repayment of borrowings – ₹40 crore
• Investment in R&D – ₹750 crore
• Expenditure towards marketing initiatives – ₹300 crore
• General corporate purposes

The initial public offer of Ather Energy IPO has been subscribed 15% on the first day of subscription today, at 15:54 IST, as per BSE data.

The initial share sale received bid for 81,89,196 shares against 5,33,63,160 shares on offer, according to BSE.

The portion for retail investors received 59% subscription while the quota for non-institutional investors has been subscribed 15% and the qualified institutional buyers (QIBs) part is yet to be booked. The employee portion has been subscribed 1.67 times.

According to Mohit Gulati, the CIO and managing partner of ITI Growth Opportunities Fund, Both Ather Energy and Ola Electric are significant players in India's electric two-wheeler market, but they present distinctly different investment profiles. For investors, Ola Electric represents a compelling high-growth, high-risk opportunity, particularly for those seeking potential market dominance and vertical integration. However, the volatility associated with its highly public founder, Bhavish Aggarwal, could impact stock performance, and profitability is still anticipated to be on the horizon.

Ather Energy’s IPO is ideal for investors looking for a differentiated, premium EV brand with solid margins and a more cautious growth strategy. Despite facing intense competition and yet to achieve profitability, its focus on quality and operational discipline sets it apart.

The company has successfullyreduced the bill of materials cost of its flagship Ather 450X (2.9 kWh) by 31% betweenFY21 and December 2024. Similar cost-saving measures across new products and inhouse component developments have improved adjusted gross margins from 7% inFY22 to 19% in the 9MFY25, alongside a consistent reduction in warranty costs andbetter working capital days.

The initial public offer of Ather Energy IPO has been subscribed 14% on the first day of subscription today, at 15:18 IST, as per BSE data.

The initial share sale received bid for 77,32,462 shares against 5,33,63,160 shares on offer, according to BSE.

The portion for retail investors received 56% subscription while the quota for non-institutional investors has been subscribed 15% and the qualified institutional buyers (QIBs) part is yet to be booked. The employee portion has been subscribed 1.61 times.

Ather focuses on households with annual incomes between INR 10–30 lakh, targetingaspirational urban buyers. The brand is well-positioned to benefit from the growing trend ofpremiumization in the two-wheeler EV segment, driven by demand for smart, connected,and performance-oriented vehicles.

1. Ability to pioneer new technologies;
2. E2Ws are positioned at a premium price in their respective segments in the E2W market;
3. Vertically integrated approach to product design with strong in-house R&D capabilities;
4. Software defined ecosystem that drives high customer engagement and drives margins;
5. Established and scalable technology platform enabling accelerated product launches;
6. Experienced management team and long-term investors committed to strong corporate governance standards.

The initial public offer of Ather Energy IPO has been subscribed 13% on the first day of subscription today, at 14:21 IST, as per BSE data.

The initial share sale received bid for 71,10,542 shares against 5,33,63,160 shares on offer, according to BSE.

The portion for retail investors received 51% subscription while the quota for non-institutional investors has been subscribed 14% and the qualified institutional buyers (QIBs) part is yet to be booked. The employee portion has been subscribed 1.49 times.

The business model of the company is based on four fundamental pillars: (i) an integrated approach to design from top to bottom, (ii) a software-driven ecosystem, (iii) a premium market positioning, and (iv) an efficient use of capital throughout the value chain operations. This model aims to provide products that prioritise quality and enhance user experience.

India held the position of the largest market for motorised two-wheelers globally in CY2023. Total domestic sales during fiscal year 2024 reached 18.4 million units. In the nine months leading up to December 31, 2024, the Indian two-wheeler market achieved sales of 15.3 million units, setting the stage for continued growth in fiscal year 2025.

This performance reflects an 11% increase year-on-year when compared to the nine months that ended on December 31, 2023. The Indian two-wheeler market is projected to expand at a CAGR of around 7% from fiscal years 2024 to 2031, ultimately aiming for a market size of 29 to 30 million units by fiscal year 2031.

In FY24, Ather experienced a loss before taxes of ₹1059.7 crore, which is considerably greater than the ₹864.5 crore loss recorded in FY23 and the ₹344.1 crore loss from FY22. Additionally, the company faced flat revenue growth in FY24, reporting revenues of ₹1753.8 crore, a decrease from ₹1780.9 crore in FY23.

“We recommend subscribe for listing gains. Its premium focus, Ather Grid and R&D driven innovation differentiates it from competitors. Company is going through major capex with its Ather Factory 3.0 (will have 10 Lakhs unit capacity by mid FY26). This comes despite challenges such as subsidy cuts and low-capacity utilization,” the brokerage said. 

The initial public offer of Ather Energy IPO has been subscribed 8% on the first day of subscription today, at 13:00 IST, as per BSE data.

The initial share sale received bid for 45,27,504 shares against 5,33,63,160 shares on offer, according to BSE.

The portion for retail investors received 41% subscription while the quota for non-institutional investors has been subscribed 3% and the qualified institutional buyers (QIBs) part is yet to be booked. The employee portion has been subscribed 1.25 times.

Prashanth Tapse, Research Analyst, Senior Vice President of Research at Mehta Equities, stated that if investors consider Ather, it has stable growth with a focus on innovation and quality, which can deliver slower growth but decent value in the long run while if investors consider OLA with higher market share invites higher risk due to high competition, which can bring pressure on financial and volatility in the price action.

On valuation parse, Ather is asking for a Market cap of Rs. 12,300 Cr and OLA is currently trading @ 21,803 Cr. Based on annualized FY 2025 earnings Ather is asking EV to Sales multiple of 6.2x, which seems to be aggressively priced when compared to OLA, which is trading around 3.5x. Given the EV segment experiencing high growth, we believe the EV segment poses significant industry risk due to entrance of established players, especially for new players who are struggling to achieve profitability. Hence, both companies fall into risk in the near term. If investors want to ride on EV scooters we believe one should have both stocks in the long-term portfolio, betting on ONE would be very difficulty at this juncture.

The current E2W product range of the company includes two distinct lines – the performance-focused Ather 450 series and the Ather Rizta series, designed for families looking for convenience scooters. Introduced in April 2024, the Ather Rizta presents a spacious seat, displays WhatsApp notifications on the dashboard, allows voice commands via Alexa Skills, offers up to 56 liters of storage, and brought traction control to the Indian E2W sector, as highlighted in the CRISIL Report.

According to the RHP, the company's peers in the market are Hero MotoCorp, which has a P/E ratio of 20, Bajaj Auto with a P/E of 29, Ola Electric Mobility, TVS Motors that has a P/E of 68, and Eicher Motors with a P/E of 37.

The initial public offer of Ather Energy IPO has been subscribed 4% on the first day of subscription today, at 11:24 IST, as per BSE data.

The initial share sale received bid for 22,36,428 shares against 5,33,63,160 shares on offer, according to BSE.

The portion for retail investors received 20% subscription while the quota for non-institutional investors has been subscribed 2% and the qualified institutional buyers (QIBs) part is yet to be booked. The employee portion has been subscribed 55%.

1. Ather Energy sources all EV components from suppliers for in-house assembly of E2W.
2. It relies on imports from countries like China, which may be affected by regulatory or policy changes.
3. Any disruption in the supply, pricing, or quality of lithium-ion cells could adversely impact operations.

The company is promoted by Tarun Sanjay Mehta, Swapnil Babanlal Jain, and Hero MotoCorp Limited. According to the RHP, the promoters collectively own 156,118,716 equity shares, representing 51.80% of the total issued, subscribed, and paid-up share capital on a fully diluted basis.

The initial public offer of Ather Energy IPO has been subscribed 3% on the first day of subscription today, at 10:39 IST, as per BSE data.

The initial share sale received bid for 14,71,310 shares against 5,33,63,160 shares on offer, according to BSE.

The portion for retail investors received 13% subscription while the quota for non-institutional investors has been subscribed 1% and the qualified institutional buyers (QIBs) part is yet to be booked. The employee portion has been subscribed 38%.

At the upper price band of ₹321, Ather’s EV/Sales ratio of 7.1x (FY24) appears expensive. However, as a pioneer in the E2W segment, the company is in a strong growth phase with robust R&D and new technological platforms. Despite current profitability challenges and valuation concerns, we recommend a "Subscribe" rating for high-risk investors with a long-term outlook.

The new manufacturing facility will involve a total capital outlay of INR 11.27 bn, including land and construction costs. Of this, ₹9.27 bn will be funded through IPO proceeds.

The Hosur Factory in Tamil Nadu handles manufacturing, with a yearly production capacity of 420,000 electric vehicles and 379,800 battery packs as of March 2024. Ather's strategy focuses on four key pillars: vertically integrated design and engineering, a software-driven product ecosystem, premium market positioning, and capital-efficient operations.

1. Strong Market Position in a High-Growth E2W Segment
2. Capacity Expansion Aligned with Market Opportunity
3. Demonstrated Cost Reduction and Margin Improvement Focus
4. High-Quality Product Ecosystem with Recurring Software Revenue and Margin Expansion

Ather intends to allocated ₹927.2 crore of the total IPO proceeds to set up an electric two-wheeler manufacturing plant in Maharashtra, allocate ₹40 crore for debt repayment, invest ₹750 crore in research and development, and spend ₹300 crore on marketing initiatives. The utilization of these funds will occur over the fiscal years 2026 to 2028.

Ather Energy is strongly positioned in India’s fast-growing electric two-wheelermarket, backed by its early-mover advantage, premium product positioning, and arobust in-house R&D and technology ecosystem. At the upper band of ₹321, the issue is valued ata EV/sales ratio of 8x, based on a 9MFY25 Sales of ₹15,789 Mn. We are recommending a “Subscribe for listing gain” rating for this issue.

Electric two-wheeler manufacturer Ather Energy Ltd announced on Friday that it has raised ₹1,340 crore from anchor investors just days before the commencement of its initial share sale for public offering. A circular posted on BSE's website indicates that the company has allocated 4.17 crore shares to 36 funds at a price of ₹321 each, which represents the upper limit of the price range.

Among the notable anchor investors receiving shares are Custody Bank of Japan, Franklin Templeton, Abu Dhabi Investment Authority, Eastspring Investments, Morgan Stanley Investment Management, and Societe Generale.

PSBI Mutual Fund (MF), Aditya Birla Sun Life MF, ICICI Prudential MF, Invesco MF, Aditya Birla Sun Life Insurance, ITI MF, and Union MF are included in the list of anchor investors.

The preliminary share allotment for the Ather Energy IPO is set to be determined on Friday, May 2, and refunds will be initiated by the company on Monday, May 5. Shares will be deposited into the demat accounts of allottees on the same day as the refunds. Ather Energy share price is expected to be listed on the BSE and NSE on Tuesday, May 6.

Ather IPO has reserved not less than 75% of the shares in the public issue for qualified institutional buyers (QIB), not more than 15% for non-institutional Institutional Investors (NII), and not more than 10% of the offer is reserved for retail investors. The employees have been reserved upto 100,000 equity shares, with a discount of ₹30 per equity share.

Ather Energy IPO GMP today or grey market premium was ₹0, which meant shares were trading at their issue price of ₹321 with no premium or discount in the grey market according to investorgain.com

Considering the activities in the grey market over the past week, today's IPO GMP is trending downwards and is anticipated to decline further. The lowest recorded GMP stands at ₹0.00, while the peak GMP is ₹17, as per insights from investorgain.com experts.

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

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.