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Ather Energy Upcoming IPO - What Investors Needs To Know

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11 Sep 20246 mins readBy MOFSL

Ather Energy, the electric two-wheeler manufacturer, filed its Draft Red Herring Prospectus (DRHP) with the capital markets regulator SEBI, aiming to raise funds through an Initial Public Offering (IPO). The IPO marks a significant milestone for the company as it becomes the second electric two-wheeler maker to debut on the stock exchange, following Ola Electric, which went public last month.

According to the DRHP, Ather Energy's IPO will include a fresh issue of equity shares worth ₹3,100 crore, along with an Offer for Sale (OFS) of 2.2 crore equity shares by the company's promoters and investor shareholders.

About Ather Energy: Pioneering India’s E-Scooter Market

Founded in 2013 by Tarun Mehta and Swapnil Jain, Ather Energy has carved a niche in India's EV industry with its innovative e-scooters and battery packs. Known for its 450 series and the recent launch of the Rizta family e-scooter, Ather also operates its own charging infrastructure, giving it an edge over competitors.

In June 2024, Ather announced its third manufacturing facility in Maharashtra and expanded to Sri Lanka. With 52% year-on-year growth and 10,873 vehicle registrations in August, Ather now ranks fourth in India's e-scooter market.

Fresh Issue and Offer for Sale Details

The net proceeds from the IPO will be allocated toward several strategic objectives, including capital expenditure for establishing a new electric two-wheeler (E2W) factory in Maharashtra, repayment or pre-payment of certain borrowings, and investments in research and development.

Specifically, the company plans to allocate ₹927 crore for the E2W factory, ₹378 crore for debt repayment, and ₹750 crore for research and development to drive innovation. Additionally, ₹300 crore will be invested in marketing initiatives to enhance brand visibility and market reach. These investments aim to increase production capacity, reduce debt, drive innovation, and strengthen Ather's market presence in the rapidly growing electric vehicle sector.

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The book-running lead managers for Ather Energy's IPO include Axis Capital, HSBC Securities and Capital Markets (India) Pvt Ltd, JM Financial, and Nomura Financial Advisory Securities (India) Pvt Ltd.

Key Shareholders in the Offer for Sale (OFS)

Several key shareholders, including promoters and corporate entities, are offering their shares for sale in the upcoming IPO. Promoters Tarun Sanjay Mehta and Swapnil Jain will each offer 1 million equity shares, with an acquisition cost of ₹21.09 per share. Major corporate shareholders like Caladium Investment Pte Ltd and National Investment and Infrastructure Fund II will offer 10.52 million and 4.61 million equity shares, with acquisition costs of ₹204.24 and ₹183.71 per share.

Notably, Hero MotoCorp, the world’s largest two-wheeler manufacturer, holds a 37.2% stake in Ather Energy and will not be selling shares in the IPO.

Financial Performance: Path to Breakeven by FY26

Despite its growth, Ather, like many in the EV sector, faces financial challenges. In Q1 FY24, the company reported revenue of ₹339 crore with an annualized run rate of ₹1,300-1,400 crore. However, Ather posted a net loss of ₹183 crore for the quarter. For the full year FY24, the company’s revenue stood at ₹1,753 crore, down 2% from the previous year, with net losses increasing by 23% to ₹1,059 crore.

Ather remains optimistic about its future, outlining plans to achieve breakeven by FY26 through continued product innovation, market expansion, and operational efficiencies.

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Market Position & Rising Competition in the Electric Two-Wheeler Space

The Indian electric two-wheeler market is evolving rapidly, with Ola Electric leading the way, holding a 44% market share in FY25, followed by TVS at 17%, Bajaj at 14%, and Ather Energy at 9%. Ola’s success is highlighted by its sales of over 1.65 lakh two-wheelers this fiscal year, a 55% increase, while Ather has sold more than 32,000 units.

Adding to the rising competition, Ola Electric recently unveiled its electric motorcycle lineup, featuring the Roadster X, Roadster, and Roadster Pro models, with deliveries expected by Q4 FY25. With Ola and Ather battling for dominance alongside other players like Revolt and Pure EV, the electric two-wheeler market is becoming a hotbed of innovation and rivalry as companies vie for market leadership.

Conclusion

With a solid history of innovation, a growing manufacturing footprint, and strategic investments in research, development, and marketing, Ather is focused on increasing production capacity and driving innovation. The upcoming IPO will be a key milestone in Ather’s journey as it looks to accelerate its expansion and secure its place as a leader in the Indian electric two-wheeler market.

 

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