Ather Energy IPO day 3: GMP, subscription status to review. Apply or not?

Mint

30-04-2025

Ather Energy IPO faced challenges in attracting significant investor interest on its second bidding day, with Ather Energy IPO subscription status at 28%, as per BSE data. Retail investors were the main contributors, subscribing 1.12 times their allotted share, while non-institutional investors (NIIs) achieved a subscription level of 27%. Ather Energy IPO will close on April 30, and the listing is set for May 6.
On the first day of bidding, Ather Energy IPO subscription status was 16%. Ather Energy Ltd announced on Friday that it has secured ₹ 1,340 crore from anchor investors. The public offering, valued at ₹ 2,981 crore, has a price band of ₹ 304-321 per share. This marks the first mainboard public offering for the financial year 2025-26. Ather Energy is the second electric two-wheeler company to enter the public market following Ola Electric Mobility, which launched its ₹ 6,145-crore IPO in August of the previous year.
Mohit Gulati, the CIO and managing partner of ITI Growth Opportunities Fund, highlighted that both Ather Energy and Ola Electric are significant players in India's electric two-wheeler market, but they present distinctly different investment profiles.
Ola Electric clearly stands out as the market leader, commanding over 35% market share. Its aggressive expansion strategy and in-house battery manufacturing provide substantial scale and cost advantages. In FY24, Ola Electric's revenues were nearly three times those of Ather Energy. However, this rapid growth comes at a cost; Ola has also recorded higher losses and a larger cash burn, highlighting its high-risk blitzscaling strategy.
In contrast, Ather Energy positions itself as a premium, technology-driven brand that prioritizes product quality and innovation. While its market share is about one-third of Ola's, Ather demonstrates a more disciplined approach, with significantly lower cash burn and superior per-vehicle margins.
The initial public offer of Ather Energy IPO has been subscribed 28% on the second day of subscription, as per BSE data.
The initial share sale received bid for 1,50,90,162 shares against 5,33,63,160 shares on offer, according to BSE.
The portion for retail investors received 1.12 times subscription while the quota for non-institutional investors has been subscribed 27% and the qualified institutional buyers (QIBs) part is yet to be booked. The employee portion has been subscribed 3.18 times.
The brokerage mentioned in its report that, in spite of its growth initiatives, the company has consistently incurred losses and has a significant amount of accumulated losses. Its financial results have led to a negative Price-to-Earnings (PE) ratio, and its borrowings exceeded ₹ 1,121 crore as of December 31, 2024, which raises concerns. Nevertheless, the company possesses strong backing from its parent organisation, which remains a crucial advantage. Given its current financial situation, this seems to be a long-term investment opportunity, and thus, only well-informed investors with extra funds and a long-term outlook may choose to invest modestly.
The brokerage's report pointed out that management anticipates a compound annual growth rate (CAGR) of approximately 41–44% for E2W sales across the industry in India until FY31, with Ather planning to leverage this growth by expanding its product offerings, lowering costs through localization and new battery technologies, and enhancing software monetization avenues.
Although the reduction of government subsidies has posed challenges, the company has succeeded in improving its profitability metrics and lessening its reliance on subsidies. At the upper end of ₹ 321, the offering is priced at an EV/sales ratio of 8x, grounded on a projected sales figure of ₹ 15,789 Mn. The brokerage is advising a "Subscribe for listing gain" rating for this offering.
Ather Energy IPO includes a fresh issue of equity shares worth ₹ 2,626 crore, in addition to an offer-for-sale (OFS) of 1.1 crore equity shares from promoters and other stakeholders.
The OFS features existing investors such as National Investment and Infrastructure Fund II, Internet Fund III Pte. Ltd, IITM Incubation Cell, IITMS Rural Technology and Business Incubator, along with promoters Tarun Sanjay Mehta and Swapnil Babanlal Jain, who will be selling off some of their shares.
Ather intends to use the proceeds from the IPO, with ₹ 927.2 crore designated for building an electric two-wheeler manufacturing plant in Maharashtra, ₹ 40 crore for debt repayment, ₹ 750 crore for research and development investments, and ₹ 300 crore for marketing initiatives. These resources will be utilized during the fiscal years 2026 to 2028.
Axis Capital Limited, HSBC Securities & Capital Markets Pvt Ltd, JM Financial Limited, and Nomura Financial Advisory and Securities (India) Pvt Ltd are the book running lead managers for Ather Energy's IPO. Link Intime India Private Ltd serves as the registrar for this offering.
Ather Energy IPO GMP today is +1. This indicates Ather Energy share price were trading at a premium of Re 1 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 ₹ 322 apiece, which is 0.31% higher than the IPO price of ₹ 321.
According to the grey market trends observed over the last nine sessions, the current GMP (Re 1) indicates a downward trajectory. The minimum GMP recorded is ₹ 0.00, while the maximum GMP stands at ₹ 17, as per insights from investorgain.com experts.
'Grey market premium' indicates investors' readiness to pay more than the issue price.
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.
First Published: 30 Apr 2025, 09:04 AM IST