Home/Blogs/Ather Energy Gears Up For Monumental IPO, Fuelled By Zerodha Cofounder's Investment

Ather Energy Gears Up For Monumental IPO, Fuelled By Zerodha Cofounder's Investment

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10 May 20246 mins readBy MOFSL

The Indian electric vehicle (EV) landscape is buzzing with excitement as Ather Energy, a pioneering force in the two-wheeler segment, sets its sights on a game-changing initial public offering (IPO). This audacious move not only underscores the company's ambition but also signifies the investor confidence in the nation's sustainable mobility sector.

Ather Energy's remarkable journey has been further bolstered by a significant investment from Nikhil Kamath, the cofounder of the renowned stock broking platform Zerodha. Kamath's substantial acquisition of a sizable portion of Flipkart co-founder Sachin Bansal's stake in the company has sent ripples of anticipation through the industry.

As the electric mobility revolution gains momentum, Ather Energy finds itself at the forefront, poised to capitalize on the growing demand for sustainable transportation solutions. With a strategic vision and a commitment to innovation, the company is leaving an indelible mark on the Indian market.

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Ather Energy: A Trailblazer in Electric Mobility

Founded in 2013 by IIT Madras alumni Tarun Mehta and Swapnil Jain, Ather Energy has swiftly emerged as a disruptive force in the Indian EV market. Headquartered in Bengaluru, the company boasts two state-of-the-art manufacturing facilities in Whitefield and Hosur, enabling it to meet the surging demand for its cutting-edge electric scooters.

Ather Energy's product portfolio currently comprises three sleek and technologically advanced electric scooters: the 450S, 450X, 450 Apex and the recently unveiled family scooter - Rizta. These vehicles have captured the imagination of urban commuters seeking a seamless blend of style, performance, and eco-friendliness. 

With an extensive network of 150 experience centers spanning 100 cities, Ather Energy has established a strong presence across the country. Undeterred by the challenges posed by the COVID-19 pandemic, the company has remained steadfast in its commitment to expanding its reach, with plans to establish a presence in 200 outlets across 120 cities by 2024.

Nikhil Kamath's Investment: A Vote of Confidence 

Nikhil Kamath, the cofounder of the highly successful stock broking platform Zerodha, has made a strategic move by acquiring a significant portion of Sachin Bansal's stake in Ather Energy. The investment amount, although not publicly published, is said to be somewhere between Rs 400 crores. This investment not only underscores Kamath's belief in the company's potential but also serves as a resounding endorsement of the Indian EV industry's growth prospects.

Kamath's decision to invest heavily in Ather Energy stems from his conviction in the product and his desire to maintain a substantial exposure to the company for the next decade. In his own words, "Among my private equity investments, this will be among the largest bets that I have made... I truly believe in the product and I am looking to have a good amount of exposure to Ather for the next decade."

This vote of confidence from a prominent industry figure like Nikhil Kamath is a testament to Ather Energy's innovative spirit and its ability to capture the imagination of investors and consumers alike.

Ather Energy's Ambitious IPO Plans 

Fuelled by the influx of capital from Nikhil Kamath's investment and the backing of prominent investors such as Hero MotoCorp, National Investment and Infrastructure Fund, Tiger Global, and Binny Bansal, Ather Energy is setting its sights on an ambitious IPO. The company is reportedly in discussions with a prestigious lineup of investment banks, including HSBC, Nomura, J.P. Morgan, JM Financial Ltd, and Axis Bank, to manage its public listing.

While the exact details of the IPO, including the size and valuation, are subject to change, industry insiders estimate that Ather Energy could be valued at a staggering $2 billion. The company aims to raise approximately $400 million through the share sale, positioning itself as a formidable player in the Indian EV market.

The IPO, slated for the second half of 2024 or early 2025, represents a pivotal moment for Ather Energy, as it seeks to capitalize on the growing demand for sustainable transportation solutions and cement its position as a leader in the electric mobility revolution.

Expanding Horizons: The Ather Rizta and Family Scooter Market

In a strategic move to capture a wider market share, Ather Energy launched their highly anticipated Ather Rizta, a family-friendly electric scooter designed to cater to the vast segment of consumers seeking spacious and practical two-wheeler solutions.

With comfortable seating, ample storage space, and generous legroom, the Ather Rizta is set to tap into the 80% of the market currently dominated by family-oriented scooters. This strategic diversification could potentially double Ather Energy's sales volume, propelling the company to new heights of success.

By broadening its product offerings and catering to a wider demographic, Ather Energy is positioning itself as a versatile and customer-centric brand, capable of meeting the diverse needs of the Indian consumer market.

Financial Outlook and Growth Strategies

Ather Energy's financial trajectory has been marked by significant investments and a strategic approach to navigating the challenges posed by the evolving market landscape. In 2022, the company secured an impressive $128 million in its Series E funding round, attracting backing from industry giants such as Infrastructure Fund Ltd and National Investment.

Despite the temporary setback caused by government subsidy cuts, which led to a dip in sales to 6,000 units in June 2023, Ather Energy has demonstrated remarkable resilience. By November 2023, the company had recovered, with sales reaching 9,000 units, and projections indicate that monthly sales could soar to 13,000 units by March 2024, regaining the peak numbers achieved prior to the subsidy cuts. In April 2024 Ather Energy saw a 48 percent YoY decline in sales to 4,502 units. In April 2023, the firm saw sales go up to 7,802 units. In March 2024, Ather recorded sales of 3,010 units

To fuel its growth ambitions and achieve profitability within the next 18-24 months, Ather Energy has acknowledged the need for additional capital infusion. However, the company's leadership remains optimistic, projecting that spending will remain flat or even decrease compared to the previous year, despite the Rs. 4 billion hit from subsidy cuts. The cash burn is expected to hover around Rs. 7-8 billion, similar to the levels witnessed in 2022.

Ather Energy's strategic partnership with Hero MotoCorp, a powerhouse in the two-wheeler industry, has further solidified its position in the market. In December 2023, Hero MotoCorp increased its stake in Ather Energy to 39.7%, injecting an additional Rs. 1.4 billion into the company and bringing its total investment to a staggering Rs. 10.4 billion.

With the backing of such a formidable industry player, Ather Energy is poised to capitalize on Hero MotoCorp's extensive distribution network and manufacturing expertise, paving the way for a dominant presence in the electric scooter market.

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Investor Confidence and Market Potential 

The success of Exicom Tele-Systems' recent IPO, an electric vehicle charging solution provider, serves as a testament to the growing investor confidence in the Indian EV sector. Exicom's listing witnessed an impressive 86% surge in share price, underscoring the immense market potential and the appetite for sustainable mobility solutions.

This positive sentiment is further bolstered by the impending IPO plans of Ola Electric, another major player in the Indian EV space. The intense competition between industry titans like Ather Energy and Ola Electric is expected to drive innovation, spur technological advancements, and ultimately benefit consumers by providing a wider range of options and competitive pricing.

As the Indian government continues to prioritize the adoption of clean energy solutions and implement policies to encourage the growth of the EV sector, the market landscape is poised for a transformative shift. This paradigm shift presents a lucrative opportunity for companies like Ather Energy to capitalize on the burgeoning demand and establish themselves as market leaders.

 

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