Ather Energy’s IPO Sees Cautious Start Amid High Hopes

Ather Energy’s highly awaited initial public offering opened with a comparatively tepid response, achieving just over 12% overall subscription on day one. Retail investors were the main driver behind that early subscription lift, with their category achieving 46% subscription by the end of the first day. Meanwhile, non-institutional investors managed to reach an overall subscription level of 14%. The offering itself has an overall target size of nearly INR 3,000 crore and is open for bidding until April 30. Shares are being offered at a price between INR 304 and INR 321. Even with this lackluster lead-in, most observers say that this kind of early first-day subscription performance is not unusual for offers that are debuting in this kind of cautious market environment.

The initial public offering (IPO), comprising a fresh issue of INR 2,626 crore and an offer-for-sale worth INR 355 crore, is the first big mainboard listing of FY26. It will test the waters of investor sentiment for the emerging Indian electric vehicle sector when it lists on May 6.

Valuation Reflects Adjusted Expectations

Ather’s valuation at the high end of its price band comes to around USD 1.4 billion, nearly 44% lower than the earlier figure they were shooting for. The company seems to be taking a more realistic approach these days, thanks to all the craziness in the global and domestic equity markets. In any case, analysts looking at the offering found Ather’s valuation to be reasonable, in light of its growth rate and an EV/sales multiple of 8x, based on a nine-month FY25 revenue estimate of INR 1,579 crore.

Experts in finance from Arihant Capital have recommended adopting a 'subscribe for listing gains' stance, which shows their level of confidence in Ather's strategic positioning and future earnings potential. Trading in the grey market shows a barely-there premium, under 1%. Yet that has not significantly reduced the level of confidence that institutions have in Ather.

Solid Anchor Support Bolsters Confidence

Before the opening of the IPO, Ather Energy received INR 1,340 crore from a list of prominent anchor investors. Included in this list are several heavyweights, such as SBI Mutual Fund, Franklin Templeton, and the Abu Dhabi Investment Authority. Seen as a vital confidence booster for retail and institutional investors considering a longer-term investment in the electric mobility sector, this anchor book is one that several individuals in the investment community are keeping an eye on.

The company plans to use the new capital to drive its next stage of growth. It aims to do things like establish a manufacturing plant in Maharashtra and pay back loans it has taken. It also intends to do quite a lot of work in research and development in marketing and other corporate endeavors.

Early Backers Set to Reap Rewards

Ather's IPO is also set to bring notable gains for its early investors. IIT Madras, through its incubation arms, holds about 15.58 lakh shares in the company and is expected to realize around INR 50 crore from the sale. This windfall reflects the long-term vision of Ather's early supporters and the successful maturation of one of India's prominent electric two-wheeler brands.

Ather Energy is in a prime position to take advantage of the rapidly changing electric vehicle market in India. It has benefited from an early-mover advantage. Its recent introduction of a premium product, the Ather Rizta, promises to grow its already substantial product suite. Ather's seemingly unquenchable thirst for in-house research and development has additionally equipped it very well for future success.