Should You Apply for the Ather Energy IPO? A Comprehensive Guide

Ather Energy, a prominent name in India's electric vehicle (EV) sector, is set to launch its Initial Public Offering (IPO) on April 28, 2025. As the EV market gains momentum, this IPO presents an intriguing opportunity for investors. However, before making any decisions, it's essential to evaluate the company's financial health, market position, and potential risks.

Ather Energy IPO Overview

• Price Band: ₹304 – ₹321 per share

• Lot Size: 46 shares (₹14,766 at the upper price band)

• Market Capitalization Post-IPO: Approximately ₹11,955 crore

• Earnings Per Share (EPS): -₹36.46 (negative)

• Price-to-Earnings (P/E) Ratio: -8.8 (negative)

• Return on Equity (RoE): -194%

• Revenue: ₹1,789 crore in FY2023-24, slightly down from ₹1,801 crore in FY2022-23

While Ather Energy has demonstrated consistent revenue growth, it continues to report losses, indicating challenges in achieving profitability.

Why Consider the Ather Energy IPO?

1. Booming EV Sector

The Indian electric vehicle market is experiencing rapid growth, driven by government incentives, rising fuel prices, and an increasing shift toward environmentally conscious transportation. The government's focus on promoting clean energy solutions positions Ather Energy to capitalize on this expanding market.

2. Product Innovation

Ather Energy has introduced innovative products like the Ather 450X and Ather 450 Plus, which have been well-received in the market. The company's focus on research and development aims to enhance product offerings and improve customer experience.

3. Expansion Plans

Ather Energy plans to establish a new manufacturing facility in Maharashtra, which could help meet the increasing demand for its products. Additionally, the company is working on expanding its charging infrastructure to support the growing EV ecosystem.

Risks to Consider

1. Financial Losses

Despite revenue growth, Ather Energy continues to report losses, with negative EPS and a high negative P/E ratio. This raises concerns about the company's ability to achieve profitability in the near term.

2. Intense Competition

Ather faces stiff competition from established players such as Ola Electric, TVS Motors, Bajaj Auto, and Hero Electric. These companies have more extensive production capabilities, brand recognition, and distribution networks, posing challenges for Ather to capture a significant market share.

3. Grey Market Premium (GMP)

As of April 28, 2025, the Grey Market Premium (GMP) for Ather Energy shares is ₹0, indicating neutral investor sentiment and no expected listing gains. This suggests that the IPO may not provide immediate returns for investors.

Conclusion: Should You Apply for the Ather Energy IPO?

The decision to apply for the Ather Energy IPO depends on your investment objectives and risk tolerance:

• Short-Term Investors: If you're seeking quick listing gains, the current GMP suggests limited upside potential. The neutral sentiment indicates that the IPO may not offer immediate returns.

• Long-Term Investors: If you're willing to accept higher risk for potential long-term rewards in the growing EV sector, Ather Energy could be a speculative addition to your portfolio. However, it's crucial to consider the company's financial health and competitive positioning before investing.

The Ather Energy IPO opens for subscription from April 28 to April 30, 2025. Ensure you conduct thorough research and consider consulting with a financial advisor to assess whether this investment aligns with your financial goals.

Applying to Ather Energy's IPO has its pros and cons. Here's a breakdown:

Advantages:

1. Early-Mover Advantage: Ather Energy is a prominent player in India's growing electric two-wheeler market, which is expected to expand significantly in the coming years.

2. Strong R&D and Innovation: The company has a robust in-house R&D ecosystem and has been launching innovative products like the Ather Rizta.

3. Growth Potential: With plans to increase production capacity and reduce costs through localization and new battery technologies, Ather is positioned for long-term growth.

4. Listing Gains: Some analysts recommend subscribing for potential short-term listing gains.

Disadvantages:

1. Financial Losses: Ather has been posting consistent losses, with significant accumulated deficits.

2. High Valuation: The IPO is priced at a premium, which might not appeal to all investors.

3. Market Volatility: The grey market premium (GMP) has been weak, indicating reduced investor interest.

4. Long-Term Investment Risk: Analysts suggest that only well-informed investors with surplus funds should consider this IPO for a long-term horizon.

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