Ather Energy, one of India’s leading electric two-wheeler manufacturers, has once again revised its IPO expectations. According to sources cited by CNBC-TV18, the company is now targeting a post-money valuation of approximately ₹12,800 crore, significantly lower than the ₹14,000 crore it had been eyeing previously.

IPO Size Reduced to ₹2,900-₹3,200 Crore

As a direct consequence of this valuation cut, Ather Energy is downsizing its IPO size. The new expected issue range is between ₹2,900 crore and ₹3,200 crore (approximately $350 million to $375 million), compared to the earlier range of ₹3,500 crore to ₹3,700 crore (around $400 million).

This decision stems from uncertain market conditions and tepid investor sentiment, which have made it harder for companies to command premium valuations. This is the second time Ather has cut its expected valuation, with initial plans targeting a ₹17,000 crore to ₹20,000 crore valuation.

IPO Structure: Fresh Issue + Offer-for-Sale (OFS)

The IPO will comprise both a fresh issue of shares and an offer-for-sale (OFS) component. According to reports, some early investors and promoters are expected to offload a part of their holdings through the OFS.

However, Hero MotoCorp, a major shareholder in Ather with a stake of over 37%, is not expected to participate in the OFS. This indicates the automaker’s continued confidence in Ather’s long-term prospects despite the IPO valuation cut.

Timeline and Delays in Listing

While Ather Energy had originally planned to go public in the first week of April 2025, the listing is now expected to be delayed by another month. The company had secured approval from market regulator SEBI in December 2024 to go ahead with the public offer.

Despite these setbacks, Ather remains committed to its IPO plans, and sources confirmed that there is no intention to withdraw the public offering.

Market Conditions Prompting Revaluation

Ather’s IPO recalibration comes in the wake of volatile capital markets that have made it challenging for startups and high-growth companies to meet aggressive valuation expectations. Investor sentiment has also been somewhat cautious towards electric mobility firms, especially in the absence of immediate profitability and clear long-term regulatory incentives.

Moreover, with other major IPOs facing valuation markdowns or subscription issues, Ather seems to be taking a conservative and strategic approach by realigning its valuation closer to current market realities.

Background on Ather Energy

Founded in 2013 by Tarun Mehta and Swapnil Jain, Ather Energy is known for its premium electric scooters such as the Ather 450X. The company has positioned itself as a tech-driven, performance-focused EV brand and has built a strong ecosystem around charging infrastructure (Ather Grid) and connected vehicle software.

Ather operates across several Indian cities and has a growing customer base, but like many EV startups, it faces challenges around scaling production, managing supply chains, and reducing costs.

Financials and Backers

Over the years, Ather Energy has attracted substantial investment from Hero MotoCorp, Flipkart co-founder Sachin Bansal, and Tiger Global, among others. The company has raised several funding rounds and was one of the first Indian EV startups to reach scale in the two-wheeler segment.

The IPO is a critical step for Ather to raise capital for expansion, particularly as competition intensifies from brands like Ola Electric, TVS, Bajaj, and new entrants. Funds raised through the IPO will likely be used to enhance manufacturing capacity, expand retail presence, and strengthen R&D.

Investor Sentiment and Sector Dynamics

The EV sector, while considered a high-growth industry, is also prone to fluctuations in policy support, raw material prices, and consumer demand cycles. Ather’s decision to lower its valuation shows a mature, market-driven approach, possibly making the offer more attractive to institutional and retail investors.

Additionally, the decision of Hero MotoCorp to stay invested and not offload any shares is a positive signal to the market, reflecting confidence in the company’s strategic direction and growth prospects.

Road Ahead

As Ather prepares for its delayed but much-anticipated IPO, market participants will be keenly watching for updated financial disclosures, anchor investor participation, and subscription momentum when the issue finally opens.

The company’s ability to successfully execute its IPO at a revised valuation, amidst challenging market conditions, could serve as a benchmark for other EV startups contemplating a public listing.

In conclusion, Ather Energy’s IPO journey is a reflection of the evolving Indian capital market, where companies are recalibrating expectations in line with investor appetite and macroeconomic conditions. While delays and markdowns may appear negative in the short run, they often signal pragmatism and long-term sustainability, which can help build greater investor trust.

The Upcoming IPOs in this week and coming weeks are Aten Papers & Foam.

Start your Stock Market Journey and Apply in IPO by Opening Free Demat Account in Choice Broking FinX

Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst.