Ather Energy’s Revised IPO Strategy: Key Developments and Market Impact

Ather Energy, one of India’s most prominent electric two-wheeler manufacturers, is preparing for its Initial Public Offering (IPO) but has made significant changes to its original plan. As per a report by CNBC-TV18, the company is now reducing the size of its IPO due to volatile market conditions and low investor enthusiasm.

Background: Ather Energy’s Original IPO Plans

The company, founded in 2013 by Tarun Mehta and Swapnil Jain, had earlier planned an IPO worth ₹3,500–₹3,700 crore. This figure represented a strong market confidence in the growing electric vehicle (EV) sector in India. Alongside, the company had initially targeted a post-money valuation of ₹14,000 crore. Prior to this, the valuation was even higher—between ₹17,000 crore and ₹20,000 crore. However, these aggressive targets have been tempered due to evolving market dynamics.

Updated IPO Details

As of now, Ather Energy is expected to bring down its IPO size to ₹2,900–₹3,200 crore. This revised range reflects the realistic investor appetite amid broader concerns affecting Indian capital markets. Consequently, the company is also lowering its post-money valuation to ₹12,800 crore.

The IPO will consist of both:

• A fresh issue of shares, allowing the company to raise capital for expansion and operations

• An Offer-for-Sale (OFS) portion, where early investors and founders may reduce part of their stake

However, it's worth noting that Hero MotoCorp, a major shareholder with over 37% stake, is not expected to sell any shares in this IPO round.

Why the Valuation and Size Cut?

The primary reason for this recalibration is the prevailing uncertainty in the market, which is causing investors to remain cautious. The recent volatility in Indian stock markets, especially in IPOs of growth-stage startups, has made many companies reconsider their fundraising expectations.

This is not the first time Ather has reduced its IPO valuation. As noted earlier, the company had earlier eyed a valuation as high as ₹20,000 crore. Each time, due to muted demand and global market risks, the company has made strategic downward adjustments to remain aligned with investor sentiment.

Status and Timeline of IPO

Ather Energy has no plans to cancel the IPO, and the company is still very much committed to going public. The IPO timeline, however, has seen multiple delays. Initially expected to debut in early 2025, the listing was moved to April 2025, but new sources suggest it could now be delayed by another month.

The company had received regulatory approval for the IPO in December 2024, which was a key milestone. Since then, internal and external market dynamics have continued to shape the company’s go-public strategy.

Ather Energy’s Market Standing and Products

Ather is currently ranked as the fourth-largest electric two-wheeler manufacturer in India, following Ola Electric, TVS Motor Company, and Bajaj Auto. The company's popular electric scooter models include:

• Ather 450 Apex

• Ather 450S

• Ather 450X

• Ather 450X Pro

• Ather Rizta

Its manufacturing plants are strategically located in Whitefield, Bangalore, and Hosur, Tamil Nadu, helping the company scale operations and manage logistics effectively.

Hero MotoCorp's Strategic Role

Hero MotoCorp, being a significant investor, has not only provided financial support but also strategic direction to Ather. By choosing not to sell its stake in the IPO, Hero is signalling long-term confidence in Ather's growth trajectory. This can also reassure new investors about the company’s fundamentals.

Implications for Retail and Institutional Investors

For investors, this IPO presents a mixed opportunity:

• On one hand, a lower valuation might offer more attractive entry points.

• On the other, the repeated valuation cuts raise questions about long-term scalability and investor sentiment.

Retail investors may need to look closely at Ather’s financials, revenue projections, and competition before subscribing. The IPO still holds potential, especially as India moves rapidly toward EV adoption backed by government subsidies and green energy goals.

Industry-Wide Impact

Ather’s decision to reduce its IPO size will also send signals to other upcoming IPOs in the EV space. It reflects the pragmatic shift that high-growth startups are making to match realistic market expectations. This could prompt other companies to revisit their own valuation and fundraising goals before entering the public market.

Moreover, the electric vehicle industry in India remains a sunrise sector, with growing adoption across urban and rural markets. Companies like Ather, Ola, TVS, and Bajaj are at the forefront of this revolution, and their IPOs are critical in bringing more transparency and capital flow into the ecosystem.

Conclusion

Ather Energy’s IPO may have shrunk in size, but the company’s strategic focus and strong brand presence remain intact. By aligning its IPO valuation with current market realities, Ather is making a mature move that prioritises long-term investor trust over short-term hype.

While some investors may see this as a red flag, others might view it as a rare opportunity to invest in a leading EV brand at relatively modest valuations. As always, diligence and clarity of investment objectives will play a critical role in determining the success of the IPO, both for the company and for those who choose to invest in it.

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.