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Ather Energy IPO: All You Need to Know

Mar 11, 2024

Ather Energy IPO: All You Need to Know

The electric vehicle (EV) market in India is experiencing a meteoric rise.

The driving factors are surging fuel prices, growing environmental awareness, and supportive government policies.

Indian consumers are ditching traditional gasoline-powered vehicles and embracing cleaner, more sustainable transportation options, particularly electric scooters.

This booming market has accelerated innovation among EV manufacturers, as they all are vying for a piece of the action.

Leading companies are gearing up for long-term success. A key part of this strategy involves entering the public market through an initial public offering (IPO).

Listing on a stock exchange allows these companies to raise vital capital for expansion, research & development, and brand building.

Remember back in December when Ola Electric made headlines with its record-breaking Rs 5.5 bn IPO plans? This isn't just a huge deal for Ola. It's poised to be a game-changer for the entire electric vehicle industry!

Well, get ready for another electric two-wheeler giant to zoom onto the scene - Ather Energy!

This is a significant milestone for the EV industry, giving a boost for electric two-wheeler manufacturers in India to go public!

About Ather Energy

Founded in 2013 by IIT Madras whiz kids Tarun Mehta and Swapnil Jain, Ather Energy is making waves in the Indian EV market. This innovative company is leading the charge for sustainable two-wheeler transportation.

The Bengaluru-based company has two manufacturing units in Whitefield and Hosur.

The company launched its first scooter, S340, in 2016, and it has now expanded to 150 experience centres in 100 cities. In 2024, the company plans to expand to 200 outlets in 120 cities.

Currently, there are three electric scooters in its portfolio - 450S, 450X, and 450 Apex.

Ather Energy is confident that its upcoming products will strengthen its reach in tier 2, tier 3, and tier 4 cities.

Ather Energy IPO Details

Ather Energy is setting its sights high, with a potential IPO valuation of US$ 2 bn. They're also aiming to raise US$ 400 million (m) through the share sale.

Nevertheless, remember, these numbers are just estimates and could change.

Ather Energy has picked a dream team of banking giants to handle their upcoming IPO!

HSBC, JP Morgan Chase & Co, and Nomura are just a few of the big names joining forces to make Ather's public debut a reality.

That's not all - local players JM Financial and Axis Bank are also jumping on board.

The IPO is expected sometime in the second half of 2024 or early 2025. There is also a possibility of more banks getting involved in the IPO process.

Before the IPO takes centre stage, Ather Energy might have one more round of funding.

Evaluation the Outlook for Ather Energy IPO

In 2022, Ather raked in US$128 m in their Series E funding round. This impressive investment included backing from big names like Infrastructure Fund Ltd and National Investment, showcasing strong confidence in the company's future.

That's not the end of the list! Ather Energy also has backing from a major player in the two-wheeler industry, Hero MotoCorp Ltd, as their shareholder.

Additionally, Flipkart co-founders Sachin and Binny Bansal have also thrown their weight behind it, highlighting the company's potential. Tiger Global Management has also put its trust in the company.

While Ather Energy currently focuses on sporty scooters appealing to a specific niche audience, they're about to make a big shift. To capture a wider market share, they're gearing up to launch a family scooter in 2024 with Ather Rizta.

Think big, comfy seats, ample storage, and legroom. This new offering targets the massive 80% of the market currently dominated by family-friendly scooters. It could also potentially double their sales volume.

The key personnel are transparent about needing more capital to turn a profit within the next 18-24 months.

The good news? Their spending is expected to stay flat or even decrease compared to last year despite a Rs 4 bn hit from subsidy cuts. The prediction is that the cash burn will likely remain around Rs 7-8 bn, similar to 2022.

Due to the government subsidy cuts, Ather's sales dropped to 6,000 units in June 2023.

However, the company recovered, taking it to 9,000 units in November 2023. By March 2024, the sales are expected to reach 13,000 units per month, getting back to their peak numbers.

Hero MotoCorp, a two-wheeler powerhouse, upped its stake in Ather Energy to 39.7% in December 2023. It poured an additional Rs 1.4 bn into the company, bringing their total investment to Rs 10.4 bn.

With Hero MotoCorp in their corner, the company is poised to become a dominant force in the electric scooter market.

A Closer Look at Ather's Financials...

Ather Energy's revenue just made a quantum leap, jumping from Rs 4.1 bn in 2022 to Rs 18 bn in 2023, skyrocketing 336.6% YoY.

That's some serious growth, solidifying their position as a top 3 player in the electric two-wheeler race, neck and neck with giants like Ola Electric and TVS Motor Company.

While revenue is soaring, profitability isn't quite there yet. Ather Energy's net loss jumped a significant 151.2% YoY, reaching Rs 8.7 bn in 2023.

The 70% subsidy cut by the government has taken its toll on sales margins. Without subsidies, the margin went down by Rs 35,000 per scooter.

However, Ather Energy quickly bounced back with design and platform changes. Now, with just Rs 20,000, their margins are fully recovered.

The company plans to prioritise market share and volume growth first. They believe profitability is just around the corner, with Ather Energy aiming to turn a profit within the next two years.

The company is strategically expanding its reach and grabbing a bigger chunk of the electric scooter market.

Currently, the company holds an impressive 11% share, ranking as the sixth-largest EV scooter maker in India.

In Conclusion

Ather Energy's focus is to achieve healthy gross margins. Every Ather scooter sold is a step closer to profitability, not a drain on their resources. The funds they raise aren't meant to fuel a cash-burning fire.

The company is all about strategic growth and investing in building a sustainable business model. They're aiming to turn a profit within the next 18-20 months.

Although Ather Energy is primarily known for manufacturing electric scooters, their Ather Grid initiative marks their entry into the realm of Charge Point Operators (CPOs), contributing significantly to the growing EV charging infrastructure in India.

This charging infrastructure initiative includes solar-powered charging stations in various cities.

This innovative approach sets the company apart, making it a frontrunner in the electric scooter race.

But the ambitions don't stop there. They're capitalising on this momentum with a highly anticipated IPO.

This could be a historic moment, making Ather a major contender in the race to become the first electric two-wheeler manufacturer to go public in India!

The Indian EV market is hotter than ever, and electric scooters are leading the charge. With many exciting players emerging, it's a fantastic time to explore your options before picking your champion.

Remember, investing is all about finding the frontrunners. So, do your research, compare companies, and get ready to be a part of this electrifying revolution.

Happy investing!

Investment in securities market are subject to market risks. Read all the related documents carefully before investing

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