Ather Energy IPO: Loss-making EV firm promises 1,400% returns for its founders
Ather Energy IPO: The upcoming initial public offering (IPO) of EV maker Ather Energy, which is set to hit the Indian stock market next week, on April 28, is already generating major buzz on Dalal Street.
While the company has yet to report a profit since its inception in 2013, the IPO is expected to deliver windfall gains — particularly for its co-founders, Tarun Sanjay Mehta and Swapnil Babanlal Jain.
Founders’ Payday
The ₹2,981 crore Ather Energy IPO, having an offer for sale portion of nearly ₹355 crore, will see its founders offload 19.60 lakh shares.
The issue is priced in the range of ₹304 to ₹321 per share. Meanwhile, the weighted average cost of acquisition by the founders stood at ₹21.09 per share. Considering Ather Energy shares are priced at the upper end of the price band of ₹321, their investment in Ather Energy will reap them multibagger gains of 1,422%.
Ather’s Financial Journey
Meanwhile, Ather Energy, despite being a prominent brand in the EV two-wheeler market, having a market share of 11.5% as of financial year 2024 (FY24) and being the third largest player by volume, has consistently remained a loss-making company.
Ather, in its RHP, said that it has incurred losses since its incorporation and had stagnant revenue growth in FY24. “There is no assurance that we will be cost-effective in our operations or achieve profitability in the future,” according to the company’s RHP.
In FY24, Ather’s loss before taxes amounted to ₹1059.7 crore, significantly higher than ₹864.5 crore in FY23 and ₹344.1 crore in FY22. It also had stagnant revenue growth in FY24 as it posted a revenue of ₹1753.8 crore compared with ₹1780.9 crore in FY23.
Ather was one of the first companies to sell e-scooters in India in 2018, but its sales trail that of larger rivals Ola Electric, TVS Motor and Bajaj Auto, said a Reuters report.
However, its backers include marquee investors like Hero MotoCorp and Tiger Global, signalling strong institutional confidence in its long-term vision. Additionally, the company’s plans to utilise a major chunk of the IPO money for expansion purposes, mainly for setting up an E2W factory in Maharashtra, and paying off debt, which bodes well.
Ather Energy’s three-day IPO will close for subscription on Wednesday, April 30. Shares are slated to list on both the BSE and the National Stock Exchange.
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