Ather Energy IPO Analysis 2025: Should You Subscribe?

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Ather Energy Ltd, a prominent player in India’s electric two-wheeler (E2W) market, launched its initial public offering (IPO) on April 28, 2025, with bidding set to close on April 30, 2025.

The grey market premium (GMP) for the IPO dropped to zero ahead of its opening, down from a peak of Rs 17 on April 22. Investors should have a clear understanding of both the potential rewards and risks before subscribing.

This IPO analysis provides a comprehensive review to help make an informed decision.

Ather Energy IPO Details 

  • Issue Details: Mainstream
  • Issue Size: Rs 2,980.76 crore
  • Fresh Issue: Rs 2,626 crore
  • Offer for Sale: Rs 354.76 crore
  • Price Band: Rs 304 – Rs 321
  • Lot size: 46 shares
  • Listing Date: May 6, 2025

Overview of Ather Energy Ltd

Ather Energy Ltd is a leading innovator in the Indian E2W market, specializing in the design, development and in-house assembly of electric scooters, battery packs, charging infrastructure and integrated software solutions. Its E2W portfolio includes two distinct product lines: the Ather 450 series, designed for performance-oriented customers, and the Ather Rizta series, catering to families looking for convenient and reliable scooters.

As of FY25, Ather holds ~11% market share in the E2W sector. By December 31, 2024, the company has expanded its footprint with 265 experience centres and 233 service centres across India, along with 5 experience centres and 4 service centres in Nepal and 10 experience centres and 1 service centre in Sri Lanka.

Ather Energy Key Strengths

  • Strong Market Positioning: Ather is a key player in India’s rapidly growing E2W industry. Ranked 3rd and 4th by sales volume in FY24 and 9MFY25, respectively, the company has shown remarkable sales growth, selling 109,577 vehicles in FY24—up from 23,402 in FY22. This represents a nearly 4.7x growth over two years.
  • Capacity Expansion: With the E2W market set for significant growth, Ather is strategically expanding its production capacity. The current Hosur plant has an annual capacity of 420,000 E2Ws and 379,800 battery packs. The upcoming Factory 3.0 in Maharashtra will increase the total production capacity to 1.42 million E2Ws annually. This expansion will support anticipated demand and improve operational efficiency through backward integration in crucial processes such as transmission and electronics assembly.
  • Improved Gross Margins: Ather has significantly improved its gross margins, rising from 7% in FY22 to 19% in 9MFY25. This improvement is driven by cost-saving measures across new products, in-house component development, a consistent reduction in warranty costs and better management of working capital days.

Ather Energy Risk Factors

  • Weak Financials: While Ather's revenue grew over 4x YoY in FY23, driven by new product launches and network expansion, it experienced a 2% decline in FY24 due to reduced subsidies, resulting in subdued demand. Despite improving operating margins, the company’s EBITDA remains deeply in the red, indicating that the path to profitability remains a significant challenge.
  • Cash Flow Concerns: Ather has faced persistent negative cash flows from operations since its inception. In 9MFY25, the company reported a negative net cash flow from operating activities of Rs 717 crore. Continued negative cash flows could jeopardize business continuity and financial stability.
  • Legal Risks: Ather is currently embroiled in legal proceedings involving the company, some of its promoters and directors, with an outstanding total of Rs 10,260 crore in claims. A negative outcome from these legal challenges could harm the company’s reputation, financial health and cash flows.
  • Stiff Competition: Ather faces intense competition from established OEMs like TVS and Bajaj Auto, who have aggressively expanded their market presence. These legacy players have leveraged their strong brand equity, supplier networks and distribution capabilities to rapidly gain market share, going from almost no presence in FY22 to becoming formidable competitors.

Final Thoughts: Should You Subscribe to Ather Energy IPO?

Ather Energy is set to become the second pure-play EV company to be listed in the country. While the E2W market in India is expected to grow significantly, Ather has been consistently posting losses and faces substantial accumulated losses.

Its financials reflect a negative Price-to-Earnings (PE) ratio. As of December 31, 2024, the company’s total outstanding borrowings stood at Rs 521 crore, which raises concerns about its financial stability.

Despite strong backing from Hero MotoCorp and a strategic position in India’s rapidly growing E2W market—where scooter penetration is projected to rise from 5.1% in FY24 to 70% by FY31—Ather faces intense competition from established OEMs like TVS and Bajaj Auto. Furthermore, its ongoing financial challenges increase the investment risk.

Given these challenges, geopolitical uncertainties and broader market sentiment, it is advisable to avoid subscribing to the IPO, as the inherent risks outweigh the potential rewards at this stage. Investors looking to tap into the clean mobility sector may consider buying the stock from the secondary market post-listing, once the company’s financial performance improves.

For a deep dive into other IPOs, explore: IPO Corner on Liquide