What's covered under the Article:

Ather Energy, a leading player in the Indian electric two-wheeler (E2W) market, is all set to launch its IPO in 2025, with an issue size of ₹ 2,980.76 crores. The IPO consists of a Fresh Issue of 818.06 lakh shares worth ₹ 2,626.00 crores and an Offer for Sale (OFS) of 110.51 lakh shares totaling ₹ 354.76 crores. The company is known for its innovation in the electric vehicle market, with a product ecosystem that includes E2Ws, charging infrastructure, and smart accessories.

IPO Details:

The price band for the Ather Energy IPO is set at ₹ 304 to ₹ 321 per equity share. At the upper end of the price band, the company's market capitalization will be approximately ₹ 11,955 crores. The lot size for retail investors is 46 shares, requiring a minimum investment of ₹ 14,766. High-net-worth individuals (HNIs) are required to invest in 14 lots, totaling ₹ 2,06,724.

The subscription period for the Ather Energy IPO opens on April 28, 2025, and will close on April 30, 2025. The allotment date is expected to be May 2, 2025, and shares will be listed on both the BSE and NSE on May 6, 2025. The grey market premium (GMP) for this IPO is ₹ 0, indicating a neutral outlook from the unorganized market. This is reflective of the company's financial performance and market conditions.

Objectives of the IPO:

The funds raised through the IPO will be utilized for the following purposes:

1. ₹ 9,272.00 million for capital expenditure to establish an E2W factory in Maharashtra.

2. ₹ 400.00 million for the repayment or pre-payment of borrowings availed by the company.

3. ₹ 7,500.00 million will be allocated to research and development (R&D).

4. ₹ 3,000.00 million will be used for marketing initiatives.

5. The remaining funds will be used for general corporate purposes.

Financial Performance and Metrics:

Ather Energy has demonstrated significant growth in the Indian electric vehicle sector, although its financial performance shows some losses. The company's revenues from operations for the fiscal years ending 2022-2024 were ₹ 4,138 million, ₹ 17,891 million, and ₹ 16,174 million, respectively. Despite the growth in revenues, the company has posted losses with an EBITDA of ₹ -3,700 million in 2024 and a Profit After Tax (PAT) of ₹ -5,779 million for the same period. These results highlight the challenges faced by the company in achieving profitability, which is common in the EV sector due to high initial investments in infrastructure and R&D.

In terms of valuation, Ather Energy’s pre-issue earnings per share (EPS) is ₹ -47.00, with a post-issue EPS of ₹ -28.45 for FY24. The company’s pre-issue P/E ratio stands at -6.83x, and the post-issue P/E ratio is -11.28x, compared to the industry P/E ratio of 39x. These metrics suggest that the IPO is fully priced considering the company’s current financials and the industry landscape.

Grey Market Premium (GMP) and Subscription Status:

The Grey Market Premium (GMP) for Ather Energy is ₹ 0, indicating that the market is uncertain about its potential listing gains. The GMP can fluctuate depending on market sentiment and the demand-supply dynamics before the listing date. It's important to note that trading in the grey market is speculative and carries risks.

As of April 23, 2025, the expected listing price is ₹ 321, matching the IPO price. Investors should approach the grey market premium as informational only, as real price discovery happens post-listing on the stock exchanges.

Ather Energy IPO Review:

While Ather Energy is a pioneer in the growing Indian electric two-wheeler market, it is still in the investment-heavy phase, leading to losses. The IPO’s valuation, combined with the company’s loss-making financials, makes it an option to avoid for those seeking listing gains or long-term investment in the immediate future.

However, for investors with a long-term perspective on the electric vehicle sector, Ather Energy’s potential for growth in a rapidly evolving industry and its focus on sustainable transportation may offer a promising outlook in the years ahead. But, considering its current financials and IPO pricing, investors should exercise caution and consider their risk tolerance before subscribing.

Conclusion:

Ather Energy’s IPO provides an opportunity to invest in a company that is spearheading the electric vehicle revolution in India. However, due to its current financial losses and neutral Grey Market Premium, we recommend investors to approach this IPO with caution, especially for those seeking short-term gains. Long-term investors, however, may consider the IPO based on the growth potential of the electric vehicle market in India.

The Upcoming IPOs in this week and coming weeks are Arunaya Organics,Kenrik Industries,Wagons Learning,Srigee DLM.

The Current active IPO are Ather Energy, Iware Supplychain Services.

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