Ever since Ather Energy, a leading electric two-wheeler manufacturer, announced its Rs 2,981 crore IPO in the market, there has been a stir in the grey market. The company filed its DRHP with SEBI on April 22, and now this IPO will be open for subscription between April 28 and 30. At the same time, shares will be allotted to anchor investors on April 25.
What is the mood of the price band and the grey market?
The IPO price band of Ather Energy has been fixed at Rs 304 to Rs 321 per share. The grey market premium (GMP) is currently at Rs 5 per share, which leads to speculation that the stock listing may be around Rs 326, i.e., a marginal premium of about 1.5%. However, in recent days, the GMP has come down from Rs 17 to Rs 5, which indicates investor caution.
Issue structure and promoter planning
The IPO is divided into two parts, a fresh equity issue of Rs 2,626 crore and an offer for sale (OFS) of 1.1 crore shares. The company’s promoters Tarun Sanjay and Swapnil Babanla, as well as some corporate shareholders, will sell their share of shares. However, Ather’s largest shareholder, Hero MotoCorp, which has a stake of about 40%, will not sell any shares in the issue.
Where will the money raised from the IPO be spent?
Ather Energy will use the funds to set up a new electric two-wheeler manufacturing unit in Maharashtra, repay old debt, spend on R&D (research and development), brand marketing, and corporate purposes. This is expected to increase the company’s production capacity and brand reach.
Product Portfolio and Market Share
Ather Energy designs and assembles its scooters and batteries in-house. It has two flagship models, the Ather 450 and the newly launched Ather Rizta. The company has a market share of around 11% in India’s electric two-wheeler market. In FY24, 68% of the company’s total sales came from South India.
Future strategy and the growing scope of the EV market
Ather no longer wants to be limited to just the premium segment. Through the new Rizta model, it is also targeting mid-segment customers. However, scaling the distribution network and competing with big OEM brands is a big challenge for it. India sold 18.4 million two-wheelers in FY24, making it the largest motorbike market in the world. The growing acceptance of EVs fills this sector with even more possibilities.