IPO Size Reduction Not a Concern, Shows Future Potential, Say Ather's Investment Bankers

After reducing the size of its IPO to ₹2,626 crore—down from the earlier target of ₹3,100 crore—Bengaluru-based electric two-wheeler manufacturer Ather Energy has assured that the move is no cause for concern. According to its investment bankers, the revised figure reflects a strategic focus on long-term growth and underscores the company’s future potential.

"From the time we've filed the DRHP till now, months have passed. And the company has grown well in that period. A significant part of this downsizing has been a cut in the offer for sale. The secondary sale has been cut by as much as it could, and right now the issue is only 12% of the entire issue. Shareholders saw the potential of the growth that is coming up, which is why they chose not to sell as they were initially. That's the predominant reason why the issue size was cut down," Ashish Nigam, Managing Director at Axis Capital, said.

The offer for sale (OFS) has been significantly reduced, with the total number of equity shares on offer through OFS halved to 1.10 crore, from the initially proposed 2.20 crore shares.

Nigam added that the current valuation is one all large investors are comfortable with. "A company which has such a long future ahead—the most critical thing for them is that investors should make money. See, no company decides the valuation; the investors do. Investors feel this is the fair value, and that's why they are going ahead," he said.

The company’s CEO, Tarun Mehta, said that the company is focusing on ironing out the current EV market barriers and is confident of adoption, even at a time when there’s a slower-than-expected pace of growth. "This is a growing industry, and we're now at a point where we have good products in the market. The portfolio of our business will grow a lot in the coming months. ICE players today have 6–12 distinct products. Most of our peers have a small fraction of that. As our portfolio expands, our real addressable market will expand. There are industry barriers around range, battery life, and charging times that are still being addressed. These are big focus areas for the brand, and this is what gives us confidence for future growth," he said.

According to Ranvir Davda, Co-Head of Investment Banking, HSBC Securities and Capital Markets India, it's a strong message on the growth capital that Ather is raising. "We're extremely excited for the Ather story, along with its solid infrastructure. We see this as a broader message—the story of the emergence of India as a global hub for sustainable technology and manufacturing—and that's a massive statement given the background around tariffs that we're sitting in," he said.

Talking about the market volatility, Ather CFO Sohil Parekh said, "In spite of this market volatility, we have received a lot of confidence from investors. With new product launches, the way distribution is panning out, and where we are sitting on  our adjusted gross margins—in nine months we have more than doubled our adjusted gross margins. And just on sheer throughput our stores are showing now and in the last six months—we are very excited," he said.

Parekh added that one cannot always time the market. "You have to see it from a long-term perspective and value-creation perspective. We believe in what we have built. We are seeing good confidence from investors. And we want to go public because we feel now is the right time. We are right at that inflection point. And all the fundamentals are there. Or else we wouldn't have gone ahead," he said.

During the financial year 2024, Ather Energy sold a total of 1.10 lakh electric two-wheelers, up from 92,093 units sold in the financial year 2023. For FY24, the company reported revenue of ₹1,753.8 crore, down 2% year-on-year. Of the topline, 90% came from vehicle sales and the rest from the non-vehicle business. The company also reported a net loss of ₹1,059.7 crore in FY24, compared to a loss of ₹864.5 crore in FY23.

Ather’s IPO will open for subscription on April 28 and close on April 30, with anchor bidding scheduled for April 25. The company’s equity shares are proposed to be listed on both BSE and NSE, with NSE designated as the lead exchange.