Ather Energy Ltd. IPO: Key Details

Ather Energy

• Ather Energy is coming out with a 100% book building; initial public offering (IPO) of 9,74,43,193 shares of Rs 1 each in a price band Rs 304-321 per equity share.
• Not more than 75% of the issue will be allocated to Qualified Institutional Buyers (QIBs), including 5% to the mutual funds. Further, not less than 15% of the issue will be available for the non-institutional bidders and the remaining 10% for the retail investors.
• The issue will open for subscription on April 28, 2025 and will close on April 30, 2025.
• The shares will be listed on BSE as well as NSE.
• The face value of the share is Rs 1 and is priced 304 times of its face value on the lower side and 321 times on the higher side.
• Book running lead managers to the issue are Axis Capita, HSBC Securities and Capital Markets (India), JM Financial and Nomura Financial Advisory and Securities (India).
• Compliance Officer for the issue is Puja Aggarwal.

Profile of the company

Ather Energy is a pioneer in the Indian electric two-wheeler (E2W) market. The company is a pure play EV company that sells E2Ws and the associated product ecosystem, comprised of its software, charging infrastructure and smart accessories, all of which are conceptualised and designed by it in India. Other than battery packs which are manufactured in-house and portable chargers and motors which are designed and manufactured by its suppliers, other key E2W components, such as motor controllers, transmissions, vehicle control units, dashboards, DC-DC converters, harnesses, and chassis are designed in-house and outsourced to suppliers for manufacturing. It developed all components of the Atherstack software that powers its products in-house. The company was founded by Tarun Sanjay Mehta and Swapnil Babanlal Jain in 2013, with a focus on product and technology development in India in order to build an E2W ecosystem. 

It builds products with a focus on quality and user experience. Its products are positioned at a premium price in their respective segments. It launched its first product, the Ather 450, in June 2018. With the Ather 450, it introduced connected features through a 3G SIM card, touchscreen dashboard, aluminium chassis and cloud integration for the first time in the E2W industry in India. It was also the first E2W to offer a top speed of 80 kmph, comparable to internal combustion engine (ICE) scooters and had the highest top speed among E2Ws in India in 2018. Its current E2W portfolio comprises two product lines - the Ather 450 line, which caters to customers seeking performance scooters, and the Ather Rizta line, which is targeted at customers seeking convenience scooters for their family.

The company’s E2Ws are complemented by its product ecosystem which comprises charging infrastructure, accessories and the Atherstack, its in-house developed software that powers its products. It was the first two-wheeler (2W) OEM to establish a 2W fast charging network, the Ather Grid, in India. The company’s software, the Atherstack, introduced industry-first connected features such as Over-The-Air (OTA) updates and ride statistics on the Ather app. It has a vertically integrated approach to the design of its products and key technologies. This integrated approach is applicable to both its hardware and software, and has enabled it to pioneer several EV technological advancements. Through this approach towards design, it seeks to establish new standards for performance, efficiency and user experience in the E2W market.

Proceed is being used to:

• Capital expenditure to be incurred by the company for establishment of an E2W factory in Maharashtra
• Repayment/ pre-payment, in full or part, of certain borrowings availed by the company
• Investment in research and development
• Expenditure towards marketing initiatives
• General corporate purposes

Industry Overview

India is the largest motorised two-wheeler market by volume in the world as of CY 2023 (according to Mordor intelligence) and had domestic sales of 18.4 million units in fiscal 2024. Indian automobile segment primarily consists of two-wheelers (2W), passenger vehicles (PV), commercial vehicles (CV), three wheelers (3W) and tractors. In fiscal 2024, Two-wheeler was the largest segment and contributed 73% to the total auto market by volume followed by the passenger vehicle segment which contributed 16.7%. The share of Two-wheeler segment in total auto market reached to 75% by volume as of Apr - Dec period of fiscal 2025, followed by passenger vehicle segment with 15% share. In the last 15 years (fiscal 2009 to fiscal 2024), the domestic two-wheeler industry has grown at a CAGR of 6.2% and reached a volume of 18.4 million in fiscal 2024. Within this period, the industry accelerated at a much faster pace of 11.1% CAGR over the 10-year period from fiscal 2009 to fiscal 2019 and reached a historic high of volumes of 21.2 million in fiscal 2019.

The industry is expected to continue its growth momentum over the long-term horizon led by the positive microeconomic and macroeconomic environment, favourable rural demand, premiumization, intermittent launches, shrinking replacement cycle and continued support from financers. Moreover, continued R&D investments by the OEMs and the technological advancements in the industry to provide an added support to the growth of the industry over the long-term horizon. Additionally, the fast-rising EV segment, with EV portfolio expansion by legacy players, capacity expansion by new age players will accelerate the industry growth. Entry of legacy players like HMSI, Suzuki and Royal Enfield in the EV space will provide further thrust to the segment growth.

Further, the electric two-wheeler retails rose at a sharp growth pace of 101% CAGR in the last 6 years, albeit off the small base of fiscal 2019. Going ahead the growth momentum in the industry is expected to continue over the long-term horizon led by rising awareness, improving TCO for electric vehicles, bridging acquisition cost gap between EV and ICE counterparts, larger vehicle portfolio, expanding charging infrastructure, furthering financing support, increasing EV manufacturing capacity, and continued government support. If the government continues with the demand incentive (FAME, EMPS or an equivalent alternate form) at least for the next 1 year (till fiscal 2026), the EV retails is expected to rise at a healthy pace of 41% CAGR and reach volumes of 10.3 million in fiscal 2031. And the EV penetration to reach 35% by fiscal 2031. Such expansion will make E2Ws one of the fastest growing segments in the automotive industry in India.

Pros and strengths

The company’s E2Ws are positioned at a premium: The company’s focus on quality and user experience enables it to position its E2Ws at a premium price within both the performance and convenience scooter segments. It had 4,535 unique tests to validate all components of its E2W, as of December 31, 2024, and its software-defined ecosystem is designed to generate engagement to enhance its product quality and elevate the user experience. For instance, it offers features such as Trip Planner, a data-driven feature in its Ather app which allows customers to plan their daily commutes and charge requirements. Data collected from app usage further drives its product development and user engagement.

Vertically integrated approach to product design with strong in-house R&D capabilities: The company’s control over the design of key components of its E2Ws and accessories, including the underlying software, gives it speed to market, control over quality, cost management capabilities, access to partnerships with large technology companies and the ability to deliver an improved user experience. It makes improvements to its products at a fast pace and introduce new models quickly. For instance, it made 204 component upgrades in Fiscal Year 2024 via engineering changes, which enabled it to drive higher sales volumes and adapt to market developments. This approach also braced the company to respond to the global semiconductors shortage which occurred between Fiscal Year 2021 and 2023, during which its sales volume increased despite the disruption in supplies.

Scalable technology platform enabling accelerated product launches: The company’s technology platform, comprising its battery, powertrain, electronics, chassis and Atherstack, serves as the backbone of its entire product lineup. As of December 31, 2024, its scooters based on the Ather 450 platform have clocked 4.11 billion kilometres since launch. The company’s technology platform offers scalability, adaptability and cost structures that accelerate the development of new products. It leverages common elements across its platform, such as the chassis, battery and BMS, to accelerate the rate at which it is able to develop new products, thereby reducing its time-to-market while maintaining its quality standards. Its platform’s modular architecture enables cost-efficient integration of new features and advancements, enabling it to continue innovating in the evolving EV market. It was able to develop the new Ather Rizta scooter model within 13 months from the first proof of concept.

Software-defined ecosystem that drives customer engagement and margins: Powered by the in-house developed Atherstack, its software-defined ecosystem aims to improve user experience and drive customer engagement. Its continued innovation and improvements to its product ecosystem, driven by insights from the Atherstack, generate a flywheel effect. Continuous technological upgrades enhance its products’ appeal to customers, enabling it to grow its customer base and harness more user data. The insights derived from the data collected guide its investments and serve as real-time feedback in its efforts to enhance the Ather ecosystem.

Risks and concerns

Maximum revenue comes from sale of limited electric two-wheeler models: The company mainly derive its revenue from the sale of electric two-wheelers (E2Ws), with its E2W portfolio comprising variants of the Ather 450 series and the Ather Rizta series. In the nine months ended December 31, 2024 and in Fiscal Year 2024, the company’s revenue from the sale of E2Ws was primarily dependent on the sale of the Ather Rizta Z (3.7 kWh) and Ather 450X (3.7 kWh). There is no assurance that its future revenue will be more evenly distributed across its E2W offerings. If its electric two-wheelers are not well-received by the market, its business and future prospects could be adversely impacted.

The company incurred losses since incorporation: The company has incurred losses since incorporation and it had stagnant revenue growth in Fiscal Year 2024 and loss before tax of Rs 5,779 million and Rs10,597 million in the nine months ended December 31, 2024 and Fiscal Year 2024, respectively. It may continue to incur operating losses as it invests in expanding its manufacturing capabilities, distribution network, product portfolio and charging infrastructure. It may not realise expected returns from such investments in the future. There is also no assurance that it will be able to increase its revenue in the future.

Geographical constrain: Sales from its retail centres in south zones in India contributes to a significant portion of its revenue. Due to this geographical concentration, any occurrences affecting southern India’s economy could disrupt its sales activities and reduce its overall sales volume, thereby adversely affecting its business, operating results and financial condition. Natural disasters, regional unrest and regulatory changes in south zones in India could have a disproportionate impact on the demand for its E2Ws. Although it has not experienced any major disruptions to its sales in south zones in India in the nine months ended December 31, 2024 and in Fiscal Years 2024, 2023 and 2022, it cannot guarantee that such disruptions will not occur in the future.

Stiff competition: The company competes with both E2W manufacturers and traditional automotive companies in the highly competitive Indian automotive industry. It cannot assure that it will be able to compete successfully within India, or in other jurisdictions that it expands into. Its existing and future competitors may have significantly greater experience and financial, technical, manufacturing, marketing and other resources than it does and may be able to devote greater resources to the design, development, manufacturing, marketing, sales and support of their vehicles.

Outlook

Ather Energy is an Indian electric two-wheeler (E2W) company engaged in the design, development, and in-house assembly of electric scooters, battery packs, charging infrastructure, and supporting software systems. The company operates as a vertically integrated EV manufacturer with a focus on product and technology development. The company’s strategy is built on four pillars: Vertically integrated design and engineering, a software-defined product ecosystem, Premium market positioning and Capital-efficient operations. On the concern side, the company currently derives its revenue predominantly from the sale of limited electric two-wheeler models. If its electric two-wheelers are not well-received by the market, its business and future prospects could be adversely impacted. Moreover, the company’s sales are geographically concentrated in South India, exposing it to additional risks of business disruptions arising from natural disasters, regional unrest and regulatory changes in South India.

The issue has been offering 9,74,43,193 shares in a price band of Rs 304-321 per equity share. The aggregate size of the offer is around Rs 2962.27 crore to Rs 3127.92 crore based on lower and upper price band respectively. Minimum application is to be made for 46 shares and in multiples thereon, thereafter. On performance front, the company’s revenue from operations slightly decreased to Rs 17,538 million in Fiscal Year 2024 from Rs 17,809 million in Fiscal Year 2023. The decrease was mainly due to the reduction in the FAME subsidies. The company’s loss for the year increased to Rs 10,597 million in Fiscal Year 2024 from a loss of Rs 8,645 million in Fiscal Year 2023. 

The company aims to achieve profitability and reduce its risk exposure by implementing the strategies below in its future business operations. It is in the process of designing a new battery platform using the lithium-iron phosphate (LFP) cathode chemistry to augment its existing battery platform. This new battery platform is expected to be compatible with some of its existing products and leverage the price difference between LFP and nickel based chemistries. It is exploring the use of heavy rare earth-free and rare earth magnet-free motors to reduce its dependence on the rare earth metals while reducing its costs. Additionally, it will continue to invest significant efforts in the expansion of its software capabilities and improve its ecosystem products.