Is Ather Energy IPO Good or Bad - Detailed Review

Ather Energy IPO is kicking off its initial public offering, which will be open from April 28, 2025, to April 30, 2025. While considering applying for this IPO, certain questions may arise in your mind, including whether the Ather Energy IPO is good or bad, whether it is worth investing in this IPO, and so on. 

This article offers a comprehensive Ather Energy IPO review, covering its business operations and fundamental analysis to help you make an informed investment choice.

Ather Energy IPO Review

Ather Energy's IPO offers a mixed opportunity for investors. On the positive side, the company is known for its strong innovation, growing brand, and focus on India’s electric two-wheeler market, which is expected to grow to 10–12 million units per year by FY31. Ather’s use of advanced technology, its in-house manufacturing strategy, and its expanding network of showrooms and service centers give it a solid position in this fast-growing space.

However, there are some serious challenges to keep in mind. Ather is still not making profits—it reported a large loss of Rs. 1,059.7 crores in FY24. Its costs are very high, with 85% of its revenue spent on making the vehicles. Although the company has improved its EBITDA margin from -34% to -23%, it's still losing money, and it's unclear when that will change. There are also risks due to its reliance on government subsidies, supply chain issues, and rising competition from both new startups and big companies.

This IPO may be a good option for long-term investors who believe in the future of electric vehicles in India and think Ather can eventually become profitable. But for short-term investors or those who prefer safer bets, it might be wise to be cautious, as the company may take time to fix its costs and generate profits.

Company Overview of Ather Energy IPO

Ather Energy was started in 2013 by Tarun Mehta and Swapnil Jain with the aim of building smart and high-quality electric two-wheelers in India. Today, Ather Energy is one of the leading players in India’s electric two-wheeler (E2W) market.

Ather is a pure-play EV company that sells E2Ws and also its supporting ecosystem around it, including its own software, charging network, and smart accessories. The company designs all components in India.  While some parts, like battery packs,s are made in-house, and motors and portable chargers are built by suppliers based on Ather’s designs, many key components, such as motor controllers, dashboards, transmissions, DC-DC converters, harnesses, and chassi,s are all designed by Ather and outsourced for manufacturing.

The company operates a manufacturing facility in Hosur, Tamil Nadu, where it assembles electric scooters. This factory has an annual installed capacity of 420,000 E2Ws and 379,800 battery packs as of December 31, 2024. Furthermore, the company is developing Factory 3.0 in Chhatrapati Sambhajinagar, Maharashtra. Upon completion of its second phase, this facility will increase Ather’s total installed capacity to 1.42 million E2Ws per annum.

The company focuses heavily on innovation, with nearly half of its team working in research and development. Ather has over 700 R&D employees based in Bengaluru and holds hundreds of patents, designs, and trademarks.

The company follows an asset-light distribution model, working with third-party partners to run its network of experience and service centers. As of December 31, 2024, Ather had 265 experience centers and 233 service centers in India, along with five experience centers and four service centers in Nepal, and ten experience centers and one service center in Sri Lanka.

In terms of market presence, Ather sold 109,577 E2Ws in Fiscal Year 2024 and 107,983 units in the nine months ending December 31, 2024. According to the CRISIL Report, the company ranked as the third-largest player by volume in FY24 and fourth-largest during the nine-month end of FY25.

Industry Overview of Ather Energy IPO

As per the Crisil report, India holds the position for the largest market for global motorized 2W, with 18.4 million units sold in FY24. Out of the total units sold, 16% of the sales accounted for the exports made by the company, and these numbers have increased to 19% as of the 9 months ended FY25.

The country has experienced a notable shift in preference within the two-wheeler industry, particularly for premium motorcycles and scooters with engine capacities of 125 cc and above. This segment has been growing steadily from FY19 to FY24.

Furthermore, with innovative advanced features and the launch of EVs at competitive prices, the E2W (Electric two-wheeler) market is expected to reach approximately 10.3 million to 12.3 million units by FY31.

This surge is further driven by factors such as more EV model launches, continued government incentives, faster infrastructure development, falling battery costs, and a growing local value chain. These trends present a strong opportunity for domestic and international players in the  E2W market. 

Financial Overview of Ather Energy IPO

In FY24, the company sold 1.10 lakh electric two-wheelers, marking a 19% growth compared to FY23. However, revenue from operations slightly declined by 2%, coming in at Rs. 1,753.8 crore, compared to Rs. 1,780.9 crore in FY23. This small drop in revenue, despite selling more vehicles, could be due to lower average selling prices or a shift in product mix. 

During FY24, the company reported an EBITDA loss of Rs. 649.4 crore, slightly better than the Rs. 686.7 crore loss in FY23. However, this smaller loss was largely because total revenue declined. A major reason for the continued losses for the company is the high cost of goods sold, which accounts for over 85% of the company's revenue. 

Looking at the nine months ended December 2024, the company sold 1.08 lakh vehicles a strong 45% increase over the same period in 2023. Revenue during this period rose by 28% to Rs. 1,578.9 crore. EBITDA losses reduced to Rs. 370 crore, compared to Rs. 422.9 crore in the previous year, and the EBITDA margin improved from -34% to -23%. 

This shows better performance during this period, with both revenue and margins showing signs of improvement. Furthermore, the company’s electric two-wheeler (E2W) market share was 10.7% in the nine months and closed the year at 11.5%, reflecting a strong and consistent position in the market.

Strengths and Risks of Ather Energy IPO

Let’s dive into the strengths and weaknesses to assess if the Ather Energy IPO is good or bad for investors

Strengths 

• Innovation
  Ather introduced many industry firsts like touchscreen dashboards, OTA updates, traction control, and smart helmets. It has strong in-house R&D with 731 engineers, 45 patents, and over Rs. 931.6 crores spent on R&D between 2022 and 2024.

• Integration
  Ather designs key components in-house, which helps improve quality, reduce costs, and speed up upgrades. It achieved a 51% BOM cost reduction in motor controllers and made 91 engineering changes in FY24.

• Software
  Atherstack powers its vehicles with smart features, generating recurring revenue and over 50% EBITDA margin from software. Around 86% of customers use these features, with 308,067 app users benefiting from tools like Trip Planner and drive analytics.

• Scalability
  Ather’s modular tech platform helps launch new products faster without losing quality, like the Ather Rizta, developed in 13 months. Its existing 450 platform has covered 4.11 billion kilometres, proving its durability.

• Efficiency

  Ather follows an asset-light model by outsourcing non-core manufacturing and using a flexible sales network. This approach supported its expansion from a small unit in Bengaluru to a 420,000-unit capacity plant in Hosur with efficient working capital.

 Risks

• Supplier Dependence
  Ather relies on third-party suppliers for most E2W components. Any failure or delay from key suppliers could disrupt manufacturing and delivery.

• Financial Losses
  Ather incurred a loss before tax of Rs. 1059.7 crores in FY24 and Rs. 577.9 crores in the first nine months of FY25. Despite increased E2W sales, revenue growth remains stagnant, and profitability is uncertain. Achieving profitability depends on increasing sales, managing costs, and expanding market share.

• Import Reliance
  Ather depends on imports from countries like China. Changes in regulations or trade tensions could disrupt supply chains and affect operations.

• Incentive Dependency
  Ather’s vehicles depend on government subsidies under the PM E-DRIVE Scheme, which provides Rs. 5,000 per kWh for FY 2025 and Rs. 2,500 per kWh for FY 2026. Changes or removal of these incentives could increase prices and reduce demand.

• Low Capacity Utilization
  Ather's Hosur Factory had a 39% capacity utilization rate for E2W assembly and 41% for battery pack manufacturing in the first nine months of FY 2024. Low capacity utilization limits operational efficiencies and economies of scale.

Strategies of Ather Energy IPO

• Expand Product Portfolio
  Ather plans to expand its electric 2-wheeler (E2W) offerings, including launching the Ather Rizta to target the convenience scooter segment, alongside performance scooters like the Ather 450 series. We’re also developing new platforms, such as the EL and Zenith, to reach a broader market, while enhancing technology and features like the Atherstack and performance upgrades.

• Focus on Cost-Effectiveness
  Ather focuses on improving unit economics by reducing the BOM cost of E2Ws through in-house technology and R&D. This includes innovations like the in-house motor controller and cost-effective battery solutions, enhancing margins and profitability despite reduced government subsidies.

• Grow Distribution Network
  We aim to expand our asset-light distribution model by increasing experience and service centres in India and international markets like Nepal and Sri Lanka. Our focus is on enhancing customer experience and quality support while expanding into under-penetrated regions.

• Enhance Operational Efficiency
  With Factory 3.0, Ather will increase production capacity and introduce backward integration to reduce costs. The facility will also enable the production of new scooter and motorcycle platforms, supporting long-term efficiency and growth.

• Secure Cell Supply Chain
  Long-term partnerships with cell suppliers, such as LG Energy and Amara Raja, ensure a stable and cost-effective supply of lithium-ion cells. This approach allows flexibility in product design and better capital allocation for growth.

• Build the Ather Brand
  Ather aims to strengthen its brand through mass media, digital platforms, and community-building initiatives. We focus on creating customer loyalty through engaging events like Ather Community Day and expanding the charging infrastructure to support E2W adoption.

• Selective Partnerships and Acquisitions
  Ather may pursue strategic partnerships and acquisitions to enhance its product portfolio and expand into international markets. We’ll focus on leveraging internal resources for potential acquisitions, aligning with our growth strategy.

Ather Energy IPO Vs Peers

When compared to its listed peers, Ather Energy Limited is the smallest in terms of revenue, reporting Rs. 1,754 crores in FY24. The company is yet to achieve profitability, as seen in its negative EPS of -47 and a significantly negative RoNW of -194%. In contrast, bigger players like Bajaj Auto, TVS Motors, and Eicher Motors are all profitable, with strong earnings and healthy return ratios, highlighting the gap between Ather and established two-wheeler manufacturers.

Objectives of Ather Energy IPO 

The fresh issue by the IPO will be used by the company for the following purposes:

• The company plans to set up an Electric Two-Wheeler (E2W) factory in Maharashtra, with an investment of Rs. 927.2 Crores.

• A total of Rs 400 Crores will go towards repaying or pre-paying existing borrowings.

• To boost innovation, Rs. 750 Crores will be directed towards research and development.

• Marketing and promotional efforts will be strengthened with an allocation of Rs.3,00 Crores.

• General corporate purposes.

Ather Energy IPO Details

IPO Dates

Ather Energy IPO will be open for subscription from April 28, 2025, to April 30, 2025. The allotment of shares to investors will take place on May 2, 2025, and the company will be listed on the NSE and BSE on May 6, 2025.

IPO Issue Price

Ather Energy Limited is offering its shares in the price band of Rs.304 to Rs.321 apiece. This means you would require an investment of Rs. 14,766 per lot (46 shares) if you are bidding for the IPO at the upper price band.

IPO Size

Ather is issuing a total of 9,28,58,599 shares, which is worth Rs. 2980.76 crores. Out of the total issue, the total of 8,18,06,853 shares worth Rs. 2626 crores are through fresh issue, and the total of 1,10,51,746 shares worth Rs. 354.76 crores are through offer for sale.

IPO Allotment Status

Investors who applied for the IPO can check their IPO allotment status on March 7, 2025, through the registrar's website: MUFG Intime India Private Limited, BSE, NSE, or their stockbroker platform.

IPO Listing Date

The shares of Ather Energy Limited will be listed on the NSE and BSE on May 2, 2025.

IPO Application Link

Open a demat account with Rupeezy today and enjoy a seamless experience when applying for the IPO. With an easy-to-use platform, Rupeezy makes the IPO application process quick and hassle-free.

Apply for Ather Energy IPO