Electric two-wheeler maker Ather Energy Ltd's (AEL) initial public offer (IPO) managed to sail through on the final day of bidding, thanks to oversubscription in the qualified institutional buyers (QIBs) and retail individual investors (RII) categories. The issue got subscribed 1.43 times on the closing day of bidding on Wednesday.
The Rs 2,981-crore initial share sale received bids for 7,65,33,972 shares against 5,33,63,160 shares on offer, according to data available with the NSE.
The RIIs part fetched 1.78 times subscription while the category for QIBs got subscribed 1.70 times amid a volatile market condition. The portion for non-institutional investors received 66% subscription.
The lukewarm response to the IPO came after a few brokerages advised investors to avoid the offering, citing concerns over the company’s steep losses and expensive valuations. The grey market premium (GMP) for the issue has come down 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.”
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. 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.