Ather Energy IPO:10 key things to know from RHP before investing in ₹2,981 cr issue;check latest Ather Energy IPO GMP

Ather Energy plans to restart its activities in the primary market this month with its highly awaited initial public offering following a pause of two and a half months. On April 22, the electric scooter manufacturer submitted a draft red herring prospectus for its IPO to the Securities and Exchange Board of India (Sebi).

Ather Energy IPO price band has been set between ₹304 and ₹321 per equity share, with a face value of Re 1. The allocation of shares for anchor investors in the Ather Energy IPO is expected to take place on Friday, April 25.

The Bengaluru-based company aims to provide significant returns for investors like Tiger Global and NIIF within the electric two-wheeler (E2W) market, which emphasizes the design, development, and in-house assembly of electric scooters, battery packs, charging infrastructure, and related software systems. This company operates as a fully integrated electric vehicle manufacturer, with a strong emphasis on product and technology innovation.

HeroMoto Corp, the majority shareholder with approximately 40% ownership, will not be divesting any shares in the IPO.

Ather Energy IPO GMP today or grey market premium is +7. This indicates Ather Energy share price were trading at a premium of ₹7 in the grey market, according to investorgain.com.

Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price of Ather Energy share price was indicated at ₹328 apiece, which is 2.18% higher than the IPO price of ₹321.

According to the grey market activities observed over the past three sessions, the IPO GMP is trending downwards today and is anticipated to decline further. The lowest GMP recorded is ₹7, while the highest stands at ₹17, as per experts from investorgain.com.

Here are 10 key things from the Red Herring Prospectus (RHP) that investors might want to know before subscribing to the issue.

Ather Energy IPO – Company Promoters

The company is promoted by Tarun Sanjay Mehta, Swapnil Babanlal Jain, and Hero MotoCorp Limited. According to the RHP, the promoters collectively own 156,118,716 equity shares, representing 51.80% of the total issued, subscribed, and paid-up share capital on a fully diluted basis.

Ather Energy IPO – Founders’ Payday

Ather Energy’s IPO, valued at ₹2,981 crore and including an offer for sale component of approximately ₹355 crore, will allow its founders to sell 19.60 lakh shares.

The shares are being offered at a price range of ₹304 to ₹321 each. At the same time, the founders’ average acquisition cost was ₹21.09 per share. Given that Ather Energy shares are set at the highest end of the price range at ₹321, the founders’ investment will yield substantial returns of 1,422%.

Ather Energy IPO – Company Peers

According to the RHP, the company’s peers in the market are Hero MotoCorp, which has a P/E ratio of 20, Bajaj Auto with a P/E of 29, Ola Electric Mobility, TVS Motors that has a P/E of 68, and Eicher Motors with a P/E of 37.

Ather Energy IPO – Company Business Model

The business model of the company is based on four fundamental pillars: (i) an integrated approach to design from top to bottom, (ii) a software-driven ecosystem, (iii) a premium market positioning, and (iv) an efficient use of capital throughout the value chain operations. This model aims to provide products that prioritise quality and enhance user experience.

Ather Energy IPO – Manufacturing Unit

Manufacturing takes place at the Hosur Factory in Tamil Nadu, which had a yearly installed capacity of 420,000 electric vehicles and 379,800 battery packs as of March 2024.

Ather Energy IPO – E2W Portfolio

The current E2W product range of the company includes two distinct lines – the performance-focused Ather 450 series and the Ather Rizta series, designed for families looking for convenience scooters. Introduced in April 2024, the Ather Rizta presents a spacious seat, displays WhatsApp notifications on the dashboard, allows voice commands via Alexa Skills, offers up to 56 liters of storage, and brought traction control to the Indian E2W sector, as highlighted in the CRISIL Report.

Ather Energy IPO – Market Opportunity

India held the position of the largest market for motorised two-wheelers globally in CY2023. Total domestic sales during fiscal year 2024 reached 18.4 million units. In the nine months leading up to December 31, 2024, the Indian two-wheeler market achieved sales of 15.3 million units, setting the stage for continued growth in fiscal year 2025.

This performance reflects an 11% increase year-on-year when compared to the nine months that ended on December 31, 2023. The Indian two-wheeler market is projected to expand at a CAGR of around 7% from fiscal years 2024 to 2031, ultimately aiming for a market size of 29 to 30 million units by fiscal year 2031.

Ather Energy IPO – Financials

In FY24, Ather experienced a loss before taxes of ₹1059.7 crore, which is considerably greater than the ₹864.5 crore loss recorded in FY23 and the ₹344.1 crore loss from FY22. Additionally, the company faced flat revenue growth in FY24, reporting revenues of ₹1753.8 crore, a decrease from ₹1780.9 crore in FY23.

Ather Energy IPO – Key risks

Some of the key risks are as follows;

• Apart from the batteries that the company produces internally, they depend on their suppliers for all other electric vehicle components used in the assembly of their E2Ws. The loss of important suppliers or any failure or refusal on their part to deliver these components could lead to disruptions in business.
• Inability to draw in customers may negatively impact their operational outcomes, financial status, profitability, and future prospects.
• If the company’s electric two-wheelers no longer qualify for the PM Electric Drive Revolution in Innovative Vehicle Enhancement scheme, or if such incentives are diminished or removed, the retail cost of these electric two-wheelers might rise, resulting in a decrease in demand for their products.

Lock-in of equity shares allotted to anchor investors

Half of the equity shares allocated to anchor investors in the anchor investor segment will be subject to a lock-in period of 90 days from the allotment date, while the other half will be locked in for a period of 30 days starting from the allotment date.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.