Ather Energy’s IPO: Can India’s EV Star Light Up the IPO Market?

The electric vehicle (EV) revolution in India is getting a high-profile test this week as Ather Energy, a pioneer in the electric two-wheeler (E2W) space, prepares to debut on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). The ₹2,980 crore IPO, which priced at the upper end of its range, has sparked both optimism and skepticism about the sector’s growth trajectory—and its ability to revive India’s struggling IPO market.

Ather’s Ambitious Play for Dominance

Ather’s IPO comes at a pivotal moment for India’s EV ecosystem. The company has carved out a niche by focusing on premium electric scooters like the Ather 450 and its newly launched Ather Rizta, which emphasize cutting-edge features such as smartphone connectivity, advanced safety systems, and long battery ranges. But its biggest asset may be its Ather Grid, a network of over 2,600 fast-charging stations across 300 cities—a critical infrastructure play in a market where range anxiety remains a barrier to EV adoption.

The IPO’s proceeds will fund Ather’s expansion plans, including a new factory (“Factory 3.0”) in Maharashtra to boost annual production to 1.4 million units, as well as R&D and marketing efforts. Yet, the company’s financials tell a cautionary tale: despite reporting ₹1,754 crore in revenue for FY24 (up from ₹1,074 crore in FY23), it posted a net loss of ₹1,059 crore, with an EBITDA margin of -36%. High R&D and distribution costs, coupled with fierce competition from rivals like OLA Electric, have kept profitability elusive.

A Risky Gamble on Growth

The IPO’s pricing at ₹321 per share—valuing the company at ₹12,300 crore—reflects investors’ belief in Ather’s long-term potential. However, the valuation carries risks. At a price-to-sales (P/S) multiple of ~4x (based on FY25E sales), Ather is trading at a premium to peers in an unprofitable sector.

Analysts have flagged several concerns. For instance:
- Supply Chain Vulnerabilities: Ather sources 30% of its components from China, including critical lithium-ion batteries. Geopolitical tensions and regulatory shifts could disrupt this supply chain.
- Profitability Hurdles: With net losses widening even as sales grow, the company faces pressure to demonstrate a path to profitability.
- Competitive Intensity: OLA Electric’s aggressive pricing and scale, along with new entrants like TVS Motor Company’s electric scooters, threaten Ather’s market share.

The IPO’s 1.43x subscription, driven largely by retail and qualified institutional buyers (QIBs), underscores mixed investor sentiment. While global funds like the Abu Dhabi Investment Authority and Franklin Templeton participated as anchors, non-institutional investors lagged, suggesting skepticism about near-term returns.

A Test Case for India’s IPO Market

Ather’s listing is being closely watched as a litmus test for India’s equity capital markets (ECMs), which have seen a sharp decline since the 2022 IPO boom. The IPO’s muted subscription and aggressive pricing have raised questions about whether investors will back high-growth, unprofitable startups in a volatile macro environment.

The EV sector itself is a key battleground. India aims to have electric vehicles make up 30% of new vehicle sales by 2030, but challenges loom, including reliance on imported lithium-ion cells and inconsistent government incentives. Ather’s ability to scale production profitably—and its success in leveraging its charging infrastructure—could set a precedent for peers.

Conclusion: Balancing Vision with Reality

Ather Energy’s IPO is a bold bet on India’s EV future. The company’s tech leadership, brand equity, and infrastructure investments are undeniable strengths, but its path to profitability remains unclear. With a valuation hinging on future growth, investors must weigh the risks: a 4x P/S multiple in an intensely competitive, capital-heavy industry demands execution perfection.

The broader market’s revival hinges on Ather’s success. If its shares stabilize or rise post-listing, it could unlock capital for other EV startups and tech firms. However, if the stock underperforms, it may deter issuers from tapping the IPO market until profitability becomes more tangible.

For now, Ather’s IPO is a reminder that India’s EV dream is still in its early innings—one where vision must be matched with financial discipline and geopolitical resilience.

Data as of May 2025. All figures sourced from Ather Energy’s IPO prospectus and market analysis reports.