Ather Energy, incorporated in 2013, is an Indian electric two-wheeler (E2W) company engaged in the design, development, and in-house assembly of electric scooters, battery packs, charging infrastructure, smart accessories, and supporting software systems.

The business model is built on four key pillars: (i) a vertically integrated approach to product design, (ii) a software-defined ecosystem that enhances user experience and performance, (iii) a premium market positioning, and (iv) a capital-efficient operational strategy across the value chain.

First product, the Ather 450, was launched in June 2018, which introduced connected features to the Indian E2W industry for the first time, including a 3G SIM-enabled touchscreen dashboard, an aluminum chassis, and cloud integration.

The current E2W portfolio includes two product lines with seven variants in total. The Ather 450 series is designed for customers seeking high-performance scooters, and the Ather Rizta series is aimed at those looking for convenient, family-friendly mobility solutions.

The E2Ws are complemented by its product ecosystem, which comprises charging infrastructure, and accessories. The battery packs are manufactured in-house, while portable chargers and motors are designed and manufactured by 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. All components of the Atherstack software that power the products are developed internally.

Driven by rising demand, sales volumes grew by 45% YoY to 107,983 units in 9M FY25. For the full year, volumes rose 19% YoY to 109,577 units in FY24 from 92,093 in FY23.

Achieved a 10.7% market share in the Indian E2W market for the nine months ended December 31, 2024, and an 11.5% market share in Fiscal Year 2024.

During 9M FY25, sale of vehicles contributed 88% to total revenue and others 12%.

The distribution model follows an asset-light approach, with experience centres and service centres operated by third-party retail partners in India, and authorised distributors in Nepal and Sri Lanka. As of December 31, 2024, there were 265 experience centres and 233 service centres in India, 5 experience centres and 4 service centres in Nepal, and 10 experience centres and 1 service centre in Sri Lanka.

As of December 31, 2024, the Hosur Factory had an annual installed capacity of 420,000 units for E2Ws and 379,800 units for battery packs. Plans to build Factory 3.0 in Chhatrapati Sambhajinagar Maharashtra, India, in two phases with the issue proceeds.

The first phase of Factory 3.0 construction is set to begin in May 2025, with production starting in phases from July 2026. The first phase is expected to be completed by March 2027, adding 0.5 million E2Ws per year to the capacity. Once both phases are completed, the combined production capacity of the Hosur Factory and Factory 3.0 is expected to reach 1.42 million E2Ws per year.

The focus remains on product and technology development, supported by in-house design and research and development (R&D) capabilities. As of December 31, 2024, the R&D team comprised 731 employees, based across three R&D facilities in Bengaluru, India. R&D accounted for 46% of the total workforce.

By February 28, 2025, there were 303 registered trademarks, 201 registered designs, and 45 registered patents globally, with pending applications for 102 trademarks, 12 designs, and 303 patents.

Aims to achieve profitability and reduce risk exposure through the strategic expansion of its product portfolio. Additionally, plans to strengthen its distribution network across India and international markets.

Open to pursuing strategic partnerships and targeted acquisitions that complement its existing offerings.

Offer and its objects

The IPO comprises fresh issue of equity shares worth up to Rs 2626 crore and an offer for sale of 1,10,51,746 equity shares aggregating up to Rs 354.76 crore, by existing shareholders Tarun Sanjay Mehta, Swapnil Babanlal Jain, Caladium Investment, National Investment and Infrastructure Fund II, and others.

Price band for the IPO is Rs 304 to Rs 321 per equity share of face value Re 1 each.

The objectives of the fresh issue include Rs 927.2 crore for capital expenditure towards the establishment of an electric two-wheeler (E2W) factory in Maharashtra, India, Rs 40 crore for repayment/pre-payment of certain borrowings, Rs 750 crore for investment in research and development, Rs 300 crore for expenditure on marketing initiatives, and the remaining amount for general corporate purposes.

The promoters are Tarun Sanjay Mehta, Swapnil Babanlal Jain and Hero MotoCorp (HMCL). The promoters and promoter group hold an aggregate of 15,87,28,716 equity shares, aggregating to 54.6% of the pre-offer issued and paid-up equity share capital. Their post IPO shareholding is expected to be around 42%.

The issue, through the book-building process, will open on 28 April 2025 and will close on 30 April 2025.

Strengths

Expanding E2W portfolio of technology-rich vehicles. Third and fourth largest player by volume of E2W sales in Fiscal Year 2024 and the nine months ended December 31, 2024, respectively.

A vertically integrated approach enables end-to-end control over key aspects of product design, facilitating faster integration of new technologies and delivering a consistently enhanced user experience.

First 2W OEM to establish a 2W fast charging network in India in 2018. Its EV charging solutions include (i) the Ather Grid, a public network of 2,616 fast chargers and 666 neighborhood chargers across 314 cities in India, Nepal, and Sri Lanka as of December 31, 2024, and (ii) portable chargers for home charging, which are bundled and sold with E2Ws.

Pioneered several industry-first EV technology innovations. These include features like touchscreen dashboard with navigation, internet connectivity via 3G SIM, OTA updates (Over-The-Air), and ride statistics available through the Ather app. As of December 31, 2024, Atherstack supported 69 features.

The technology platform offers strong scalability, adaptability, and cost-efficient structures, enabling rapid development of new products. For instance, the Ather Rizta scooter model was developed in just 13 months from the initial proof of concept.

The asset-light distribution model helps reduce both upfront capital investments and operational costs, while providing the flexibility to adjust distribution reach in response to changes in customer demand.

The Indian E2W market is set for continued growth, driven by the narrowing gap in total cost of ownership between electric two-wheelers and internal combustion engine (ICE) vehicles, rising disposable incomes, favorable government policies, and a growing shift toward sustainable mobility solutions. Ather is well positioned to capitalize on this trend, supported by a focused product strategy, strong software capabilities, and a resilient supply chain.

Extensive experience of promoters and senior management personnel.

Weaknesses

The business has incurred losses and reported negative cash flows from operations since its inception. Additionally, it faced stagnant revenue growth in Fiscal Year 2024.

Heavy reliance on South India, which contributed 61% to revenue in 9M FY25, highlights a geographic concentration risk.

Apart from batteries, all other key EV components used in the assembly of E2Ws are sourced from external suppliers. Any disruption or loss of critical suppliers could potentially affect business.

As of December 31, 2024, there were 134 pending customer complaints, of which 25 complaints were more than 30 days old.

Disruptions in the availability, pricing, or quality of lithium-ion cells could lead to significant operational challenges and potential fire incidents, which could harm the brand's reputation.

Ongoing legal proceedings, including criminal cases, involve Ather Energy, its directors, and promoters. An adverse outcome could negatively affect the business. As of April 2, 2025, litigation amounted to Rs 116.19 crore, representing 108% of its net worth.

The statutory auditors highlighted an Emphasis of Matter in their audit report for Fiscal Year 2022.

Contingent liabilities amounted to Rs 60.8 crore as of December 31, 2024, representing 56% of net worth as of April 2, 2025. If any of these liabilities become non-contingent, it could adversely affect the business, and financial condition.

A reduction, elimination, or ineligibility for government schemes like PM E-DRIVE could raise the retail price of its E2Ws, potentially affecting customer demand.

Tarun Sanjay Mehta and Swapnil Babanlal Jain, two of its Promoters, have each pledged 31,19,357 equity shares, together accounting for 2.07% of the fully diluted capital, in favor of 360 ONE Prime.

Valuation

Net sales increased 28% to Rs 1578.9 crore in 9M FY2025 compared to 9M FY2024. The OPM improved 1039 bps to negative 25.87%, leading to 8% reduction in operating loss to Rs 408.5 crore. OI increased 65% to Rs 38.5 crore. Interest cost rose 17% to Rs 82.1 crore. Depreciation cost went up 15% to Rs 125.8 crore. There were no exceptional items during the period, compared to an expense of Rs 174.6 crore during 9M FY2024. Tax expenses remained nil. As a result, net loss narrowed by 26% to Rs 577.9 crore.

Net sales decreased 2% to Rs 1753.8 crore in FY2024 primarily due to the reduction in the Faster Adoption and Manufacturing of Electric (FAME) subsidies compared to FY2023. The OPM improved 69 bps to negative 39.04%, leading to 3% reduction in operating loss to Rs 684.7 crore. OI increased 69% to Rs 35.3 crore. Interest cost rose 37% to Rs 89 crore. Depreciation cost went up 30% to Rs 146.7 crore. There was an exceptional expense of Rs 174.6 crore in FY2024, compared to nil in FY2023. Tax expenses remained nil. As a result, net loss increased by 23% to Rs 1059.7 crore.

Despite its strong growth potential in the electric vehicle market, Ather Energy faces several challenges that may slow its progress. Its heavy reliance on South India, ongoing legal risks, and uncertainty surrounding profitability could affect its growth prospects. While the company has demonstrated strong volume growth in 9M FY25, the road ahead may be challenging.

Given the negative EPS, P/E is not applicable for valuation. EV/Sales ratio will be used as the alternative valuation metric.

At the higher price band of Rs 321, the offer is made at Post-issue EV/ TTM Sales of 6.18 times, on a post-issue equity share capital of Rs 37.25 crore of face value of Re 1 each. Listed industry peers such as Ola Electric Mobility trades at 4.45 times its EV/ TTM sales, Hero MotoCorp trades at 2.3 times, Bajaj Auto trades at 5.12 times,and TVS Motors trades at 3.1 times.

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