The initial public offering (IPO) of electric two-wheeler manufacturer Ather Energy Ltd (AEL) saw a lukewarm response on the first day of bidding, with the issue being subscribed to just 16%. A few brokerages advised investors to avoid the offering, citing concerns over the company’s steep losses and expensive valuations.
The initial share sale received bids for 86,09,406 shares against 5,33,63,160 shares on offer, according to data available with the NSE. The grey market premium (GMP) for the issue has dropped to Rs 1, signalling a potential soft listing on the exchanges.
“Ather Energy’s offer is valued at 5.7x (based on annualised FY25 sales). At these valuations (on P/S basis), the pure-play electric OEM is quoting higher compared to some of the traditional 2w OEMs, which now have EV businesses housed within the larger entities,” said Asit C Mehta Investment Intermediates.
It added, “Increasing EV focus by legacy players such as Bajaj Auto and TVS Motors is heating the competition. This creates uncertainty around the timeline of attaining profitability, even at the EBITDA level. Accordingly, we have a ‘Avoid’ rating on the IPO of Ather Energy as a wait-and-watch strategy might be more appropriate.”
Analysts at Bajaj Broking said that despite its growth initiatives, the company has been consistently posting losses and carries significant accumulated losses.
“Its financial performance has resulted in a negative Price-to-Earnings (PE) ratio, and its borrowings stood at over Rs 1121 crore as of December 31, 2024, which is a point of concern. However, the company benefits from strong parentage, which remains its key strength,” they noted.
Bajaj Broking said that Ather appears to be a long-term investment story, and therefore, only well-informed investors with surplus funds and a long-term perspective may consider investing moderately.
AEL’s revenue grew at a CAGR of 107.1% between FY22 and FY24, reaching Rs 1,753.8 crore. However, the company losses also surged significantly to Rs 1,059.7cr in FY24.
While giving a “subscribe with a long-term outlook” rating, brokerage firm Geogit Investment said that at the upper price band of Rs 321, Ather’s EV/Sales ratio of 7.1x (FY24) appears expensive. “However, as a pioneer in the E2W segment, the company is in a strong growth phase with robust R&D and new technological platforms. Despite current profitability challenges and valuation concerns, we recommend a "Subscribe" rating for high-risk investors with a long-term outlook,” it said.
Founded in 2013 by Tarun Mehta and Swapnil Jain, Ather is a pure-play electric two-wheeler (e-2w) company that designs and sells premium e-2ws.
The Rs 2,981-crore public issue, with a price band of Rs 304-321 apiece, is available for public subscription from April 28-30. Ather on Friday said it has mobilised Rs 1,340 crore from anchor investors. At the upper end of the price band, the company's overall valuation is pegged at Rs 11,956 crore.
This is the first mainboard public issue of the current financial year 2025-26 and the second electric two-wheeler company to go public after Ola Electric.