Ather's $450 mn IPO: The next big spark in India's electric revolution

The move to go for an IPO is well timed as it comes on the heels of a successful debut in the stock market by its start up rival Ola Electric just few days ago when it raised Rs 5500 crore

Bengaluru-headquartered electric two-wheeler manufacturer Ather Energy is all set to file its draft red herring prospectus within the second week of September to the Securities Exchange Board of India (Sebi) for its maiden initial public offering (IPO), in which it is expected to raise over $450 million.

On Tuesday, the fourth-largest electric two-wheeler maker in the country by volume raised Rs 600 crore from its existing investor, the National Investment and Infrastructure Fund (NIIF), catapulting itself into a unicorn with a valuation of $1.3 billion.

The move to go for an IPO is well-timed, as it comes on the heels of a successful stock market debut by its startup rival, Ola Electric, which raised Rs 5,500 crore. Its offering was oversubscribed by more than four times. A spokesperson for Ather Energy declined to comment on the issue.

While the stock opened on the bourses on August 9, close to the issue price of Rs 76 (at Rs 75.99), it has shot up, hitting the upper circuit regularly in the past few days, closing on Tuesday at Rs 108.

Sources aware of the development say that Ather expects to launch its IPO sometime in December or in the early months of 2025. The funds will be used for its expansion, as it is setting up a new plant in Aurangabad with a capacity of 1 million electric two-wheelers per year, which will require an investment of Rs 1,000 crore.

Those involved with the IPO say that since the groundwork for an electric vehicle IPO has already been undertaken by Ola, which took about six months to get cleared by Sebi, the expectation is that clearance for Ather’s maiden offering could be granted faster.

With NIIF increasing its stake, its leading investor, Hero MotoCorp, will see its share reduced to around 38 per cent, below the cap of 40 per cent, which they can reach as part of their agreement with the promoters.

The two promoters, Tarun Mehta and Swapnil Jain, will together hold just over 14 per cent (they have also increased their stake recently by pumping in fresh funds), while NIIF’s shareholding will rise to 13–14 per cent.

In July this year, based on Vahan data, Ather achieved a market share of 14.96 per cent, registering 10,118 vehicles, primarily driven by the delivery of its new family electric scooter, the Rizta. Sources say it has seen brisk bookings of over 35,000 vehicles.

However, the market is heating up as incumbent operators flex their muscle by entering the sub-Rs 1 lakh electric scooter segment, where Ola has dominated with the launch of its own models, which include both Bajaj Auto and TVS Motor Company.

As a result, Bajaj saw its biggest jump in vehicle registrations, which went up by 95.8 per cent to hit 17,689 vehicles. In terms of the share in the incremental increase from June through July, the incumbent player grabbed a 32.9 per cent share compared to Ather, whose share of incremental sales was at 14.96 per cent, and TVS at 20.9 per cent.

Ola still reigns supreme, but its market share of 40 per cent has been falling. Its share in the incremental sales increase from June through July was 18.5 per cent.

According to the latest figures, Ather clocked a flat revenue of Rs 1,789 crore in 2023-24 (FY24) against Rs 1,783 crore in 2022-23. However, its losses widened to Rs 1,059 crore in FY24 compared to a loss of Rs 864 crore the previous year.

Riding the electric wave
 

·         Company becomes a unicorn with a valuation of $1.3 billion

·         Plans to raise around $450 million from IPO

·         Requires funds for a new plant near Aurangabad with an eventual capacity of 1 million vehicles per annum

·         Will invest Rs 2,000 crore in the plant

·         Expects to launch IPO in December or the early months of 2025

·         Held a 14.96% share of electric two-wheeler registrations in July

·         Revenue in FY24 was flat, but losses widened