Business Profile of the Ather Energy Limited
Ather Energy pioneer in the Indian electric two-wheeler market, designing and developing E2Ws, battery packs, charging infrastructure, software, and accessories. They are a pure play EV company that designs all their products in India. During FY24, they sold 109,577 E2Ws, making them the third largest player by volume. The company focuses on quality and user experience, offering premium prices for their products.
They have two product lines: the Ather 450 for performance scooters and the Ather Rizta for convenience scooters. They operate an asset-light distribution model with 208 experience centres and 191 service centers in India and Nepal. They also introduced the Ather Grid, India's widest 2W fast charging network. They assemble E2Ws and manufacture battery packs at the Hosur Factory.
The Main Objectives to Launch the Ather Energy Limited IPO
As per the draft red hearing prospects, the IPO issue consists of both offer for sale and fresh issue by the company.
- The OFS consists of up to 22, 000, 766 Equity Shares aggregating up to Rs. [●] million. Nothing from those proceeds of OFS will be allotted to company.
- Ather Energy IPO also has a fresh issue of Rs. 3100 crores. Out of which; Rs. 927.2 crores will be used for capex, Rs. 378.2 crores will be used for payment of certain borrowings, Rs. 750 crores will be used for R&D, Rs. 300 crores for marketing and rest of the amount toward corporate general expenses.
| Particulars | Estimated Amount (in ₹ million) |
| Capex to be incurred by company for establishment
of an E2W factory in Maharashtra, India |
9272 |
| Payment of certain borrowings availed by company | 3782 |
| Investment in research and development | 7500 |
| Expenditure towards marketing initiatives | 3000 |
| General corporate purposes | [●] |
| Total Net Proceeds | [●] |
IPO Details of Ather Energy Limited:
| IPO Open Date | N.A. |
| IPO Close Date | N.A. |
| Basis of Allotment | N.A. |
| Listing Date | N.A. |
| Face Value | ₹1 per share |
| Price | N.A. |
| Lot Size | N.A. |
| Total Issue Size | [●] Equity Shares |
| aggregating to ₹ [●] million | |
| Fresh Issue | [●] Equity Shares |
| (aggregating up to ₹3100.00 Cr) | |
| Offer For Sale | Up to 22,000,766 Equity Shares |
| aggregating to ₹ [●] million | |
| Issue Type | Book Built Issue IPO |
| Listing At | BSE & NSE |
| QIB Shares Offered | Not less than 75% of the Net Issue |
| Retail Shares Offered | Not more than 10% of the Net Issue |
| NII (HNI) Shares Offered | Not more than 15% of the Net Issue |
Issue Price & Size: Ather Energy Limited IPO
The issue price of Ather Energy Limited hasn’t been released yet. Upon releasing the dates, the investors can bid between those price ranges. The company only has an OFS of up to 22, 000, 766 equity shares and fresh issue of Rs. 3100 crores.
Launch Date of Ather Energy Limited IPO
The IPO opening date of Ather Energy hasn’t been officially announced yet, upon the declaration of dates investor can bid for IPO.
Ather Energy Limited Financial Statements
| Particulars | FY24 | FY23 | FY22 |
| Revenue from operations | 17538 | 17809 | 4089 |
| Other income | 353 | 209 | 49 |
| Total income | 17891 | 18018 | 4138 |
| EXPENSES | |||
| Cost of materials consumed | 15792 | 15370 | 3482 |
| Purchase of stock-in-trade | 279 | 923 | 201 |
| Change in inventories of finished goods,
stock-in-trade and work-in-progress |
247 | -339 | 155 |
| Employee benefits expense | 3692 | 3348 | 1139 |
| Finance costs | 890 | 650 | 407 |
| Depreciation and amortisation expenses | 1467 | 1128 | 484 |
| Other expenses | 4375 | 5583 | 1711 |
| Total expenses (IV) | 26742 | 26663 | 7579 |
| Loss before exceptional items and tax | -8851 | -8645 | -3441 |
| Exceptional items | -1746 | - | - |
| Loss for the year | -10597 | -8645 | -3441 |
(Rs. in millions)
| Key Performance Indicators | Units | FY24 | FY23 | FY22 |
| Vehicles Sold | Numbers in 000’ | 110 | 92 | 23 |
| Year-on-year growth of Vehicles Sold | (%) | 19% | 294% | 373% |
| Revenue from Operations | INR in Million | 17538 | 17809 | 4089 |
| Year-on-year growth in
Revenue from Operations |
% | -2% | 336% | 412% |
| Adjusted Gross Margin | % | 9% | 11% | 7% |
| EBITDA | INR in Million | -6494 | -6867 | -2550 |
| EBITDA Margin | % | -36% | -38% | -62% |
| Revenue Mix | ||||
| Sale of Vehicles | % | 90% | 80% | 91% |
| Sale of Non-Vehicle | % | 10% | 20% | 9% |
| Revenue per unit of Two
Wheeler Vehicle Sold |
In INR | 143333 | 155571 | 158192 |
| Profit / (Loss) for the year | INR in Million | -10597 | -8645 | -3441 |
| Profit / (Loss) for the year Margin | % | -59% | -48% | -83% |
| Working Capital Days | Days | -46 | -21 | -33 |
| E2W Market Share (%) | % | 11.50% | 10.60% | 7.90% |
Ather Energy Limited Promoters & Shareholding
There are three promoter of Ather Energy limited i.e. Tarun Sanjay Mehta, Swapnil Babanlal Jain and HMCL.
The promoters in aggregate hold 23,020,461 equity shares and 508,086 Preference Shares, constituting 50.47% of the paid-up share capital of company, on a fully diluted basis.
| Name of the shareholder | Number of Eq. Shares on a fully diluted basis | % of pre-Offer Eq. on a fully diluted basis | Selling Shareholder |
| Promoter | |||
| Tarun Sanjay Mehta | 20517732 | 6.63 | 10,00,000 |
| Swapnil Babanlal Jain | 20517732 | 6.63 | 10,00,000 |
| HMCL | 115083252 | 37.2 | |
| Total | 156118716 | 50.47 | |
| Promoter Group | |||
| Mehta Family Trust | 783000 | 0.25 | |
| Tarun Swarna Family Trust | 522000 | 0.17 | |
| Swapnil Jain Family Trust | 652500 | 0.21 | |
| Jain Family Trust | 652500 | 0.21 | |
| Total | 2610000 | 0.84 | |
| Selling Shareholders | |||
| Caladium Investment Pte Ltd | 46514376 | 15.04 | 1,05,20,000 |
| National Investment and Infrastructure Fund II | 20412027 | 6060 | 46,16,519 |
| Internet Fund III Pte. Ltd. | 19760832 | 6.39 | 40,00,000 |
| 3State Ventures Pte. Ltd. | 2857950 | 0.92 | 4,80,000 |
| IITM Incubation Cell | 1372860 | 0.44 | 3,10,495 |
| IITMS Rural Technology and Business Incubator | 185310 | 0.06 | 41,910 |
| Amit Bhatia | 18531 | 0.01 | 18,531 |
| Karandeep Singh | 13111 | Negligible | 13,311 |
| Total | 91135197 | 29.46 | |
| Grand Total | 249863913 | 80.77 | |
Should You Subscribe to Ather Energy Limited IPO or Not
While investing or subscribing to any IPO, consider the investment rationales related to the company. Hence, here you can find out the strength of the company that will be its growth factors. And also check the risk factors that can affect the growth and operational efficiency of the company.
Competitive Strengths of Ather Energy Limited:
Pioneering new technologies
Ather was the first 2W OEM to establish a fast charging network for E2Ws in 2018. As per CRISIL Report, Ather has played significant role in the Indian E2W industry with the company investing over ₹235 crores in R&D in past three years. The company introduced innovations like fast charging, Fall Safe, traction control, and smart helmets. The Ather 450 was India's first E2W with features like a touch screen dashboard, 3G SIM connectivity, OTA updates, and an aluminium chassis. The company has filed 273 patents, 219 design registrations, and 392 trademarks globally.
Positioned at a premium price
The company's focus on quality and user experience has led to a premium price for its Electric Scooters (E2Ws) in both performance and convenience scooter segments. The company has conducted 3,826 unique tests and uses a software-defined ecosystem to enhance product quality and user experience. The company also offers features like Trip Planner in its app, which allows customers to plan their daily commutes and charge requirements. The company's distribution and service network are designed to showcase the engineering behind its products, with an average turnaround time of 4.7 hours for standard maintenance. The company also tracks and analyzes customer satisfaction metrics. Despite its premium pricing, the company remains the third-largest E2W manufacturer in India.
Software-defined ecosystem
The Atherstack is a software-defined ecosystem designed to improve user experience and customer engagement. It uses insights from the Atherstack to drive continuous technological upgrades, allowing the company to grow its customer base and harness more user data. The Ather Data Platform processes data from sources like the Ather App, E2Ws, charging infrastructure, and smart accessories, providing insights on customer usage patterns, product performance, post-sales journey, and charging insights. This intelligence guides investments and serves as real-time feedback in enhancing the Ather ecosystem. The Atherstack has 89% of customers who purchased E2Ws also purchasing advanced features, and the company has 222,133 monthly active users on the Ather app.
Capital-efficient business model
The company operates a capital-efficient business model, prioritizing control over design and technology while maintaining operational flexibility. This approach reduces upfront capital needs, promotes cost savings, and minimizes over-investment risk. The company's cash burn rate is lower than its domestic and international peers. The company prioritizes sustainability and flexibility, allowing it to respond to market trends and customer demands. Investments in R&D and manufacturing facilities are made, and a localized supply chain is utilized for E2W components. The company procures lithium-ion cells from third-party suppliers and outsources in-house components to third-party manufacturers. The company started with a small-scale factory in Bengaluru, India, and expanded to larger facilities in the Hosur Factory. The company's distribution network is asset-light, allowing rapid expansion and cost efficiencies.
Future Strategy
The company plans to expand its product portfolio through multi-product technology platforms, launching electric vehicles (E2Ws) like the Ather 450 and Ather Rizta, and developing new platforms like the EL and Zenith. It will also explore rare earth-free motors and expand its software capabilities. The company plans to expand its distribution network in India and international markets, focusing on quality and customer satisfaction. The company reported a 329% increase in revenue between 2022 and 2024 due to premium positioning and increased sales volume of E2Ws. The company aims to improve gross margins by reducing the BOM cost of E2Ws through investments in R&D capabilities and technologies. The company plans to secure its cell supply chain through long-term partnerships with cell suppliers. The company also plans to build its 'Ather' brand and expand its charging infrastructure.
Risk Factors of Ather Energy Limited:
History of losses
The company's revenue is primarily generated from sales of electric two-wheelers, along with accessories and other services. From FY22 till FY24, the company has reported new cash outflow from operation activities. The company may continue to incur operating losses as it invests in expanding manufacturing capabilities, distribution network, product portfolio, and charging infrastructure. The company's profitability, positive cash flows, depend on factors like increasing total revenue, utilizing production capacity, controlling costs, and expanding internationally.
Dependant on demand of EV
Compared to Internal Combustion Engine vehicles, EV vehicles are still in their nascent stage but the market is experiencing significant growth. The growth attracts new players in the market and expanding its horizon. Limited awareness of the benefits of EVs may restrict mass adoption of EV. Factors influencing adoption include perceptions toward EV vehicles, safety, design, performance, cost, uncertainty on resale value, service and spare parts, charging points, tax subsidies, and many more. If the EV market fail to nurture in its nascent stage or does not develop as per company expectation, it could impact the business, future prospects, financial condition.
Building customer base
The success of business relies on ability to building strong customers base to purchase E2Ws, accessories, Atherstack, and charging services. Their customer base has grown significantly over the past three fiscal years. They have allocated significant resources to advertising and marketing activities, including promotional discounts on E2Ws. There are many factor that consumer analyse prior to associating like timely delivery, specifics of product, after-sales services, charging infrastructure, and brand value.
| Particular | FY24 | FY23 | FY22 |
| Customers (in 000’) | 114 | 85 | 23 |
| Growth (%) | 34% | 270% | 360% |
Government incentives
The company benefits from government incentives like the FAME subsidy, which was replaced by the Electric Mobility Promotion Scheme 2024 (EMPS 2024). However, reductions, eliminations, or ineligibility for these incentives could reduce demand for Electric Vehicles (E2Ws) and make them less price competitive compared to conventional ICE 2Ws.
Policy changes may require the company to pass on additional expenses to consumers, increasing the retail price of E2Ws. Availability of government subsidies is critical to accelerating E2W adoption and ensuring consumers continue to purchase E2Ws. As per the document, Ather 450S, Ather 450X, and Ather Rizta have received EMPS 2024 subsidies. However, the Ather 450 Apex does not benefit from the subsidy.
The EMPS 2024 subsidy requires E2Ws sold to meet government performance and efficiency eligibility criteria. Failure to meet these requirements could result in costlier product price and increased expenses, potentially impacting business and financial performance.
Dependence on third-party suppliers
The company's E2Ws, which include components from domestic and foreign third-party suppliers, are exposed to the risk of component shortages. The company sourced 72% of its materials for the FY24 and their top 10 suppliers, collectively supplied 75% of their total purchases during FY22 to FY24. The number of suppliers of electronic components, lithium-ion cells, seat locks, and side stand sensors is more limited. Unexpected changes in trade policies, business conditions, quality of component, product pricing, shipping disruptions, and other factors beyond the company's control could affect their ability to provide an adequate and steady supply of components.
The unavailability of any component or inability of suppliers to supply such components to a satisfactory quality could result in production delays and related issues.
Change in quality and pricing of component
Governments around the world are moving from internal combustion engines to more nature-friendly mode of transport. So the growth in EVs without significant expansion in cell production capacity could result in shortages of its suppliers increasing prices, increasing production costs. Above that, an increase in the cost of raw materials could affect suppliers' manufacturing schedules and supplies. Changes in government policies or regulations regarding imports or exports from other countries especially China, could also cause supply disruptions. Finding for alternative suppliers or setting up facility could negatively impact the company's financials, prospects, its operations and cash flows.
Assembly and manufacturing of E2Ws and battery pack
The company assembles E2Ws and manufactures battery packs at two facilities near Hosur, Tamil Nadu. Risks affecting the factory include political and regional strife, labor shortages, severe weather, electricity and water supply shortages, and quality issues.
| Units Produced | 2024 | 2023 | 2022 |
| E2W | 108344 | 93948 | 22644 |
| Battery packs | 109359 | 96253 | 23100 |
Capacity utilization
The Hosur Factory has a total installed capacity of 420,000 units for E2W assembly and 379,800 units for battery pack manufacturing per annum in Fiscal Year 2024. The factory is expanding its battery pack manufacturing capacity to manufacture 531,120 units per year. However, the factory may not be able to fully utilize this capacity if demand for E2Ws does not meet expectations. The table below provides annual installed capacity, effective annual capacity, annual production, and capacity utilization rate for E2W assembly and battery pack production in the fiscal years indicated.
The factory has a capacity utilization rate of 29% across both E2W assembly and battery pack manufacturing lines in Fiscal Year 2024. If demand for E2Ws does not increase and operations are not expanded, operational efficiencies and economies of scale may not be realized. Additionally, if there are not sufficient customer orders to fully utilize the additional production capacity at Factory 3.0, increased costs and lower profit margins may occur. The factory cannot assure that it will achieve high capacity utilization rates in the future, which could limit its ability to leverage economies of scale and adversely affect margins and operational results.
Ather Energy Limited Grey Market premium
Grey market premium is the premium quoted over the IPO issue price. GMP shows that investors are ready to pay above the upper band of the IPO issue price. GMP is determined in the grey market as per the demand and supply of the shares in the primary market. A grey market is that unofficial ecosystem of unlisted companies' stocks that start trading even before the launch of the IPO to the date of its listing.
Also Read: What is Grey Market Premium in IPO: How is GMP Calculated & Reliable
However, GMP is not a reliable factor, as it keeps fluctuating as per the demand and supply of shares in the primary market. There are numerous factors that affect the stock market in India and individual stock prices of different companies that are already listed and trading in the secondary market. However, for an IPO-bounded company, you can consider the GMP as the speculative listing price of the share
According to various online sources, the Grey Market Premium or GMP of the Ather Energy Limited is trading around Rs XX in the grey market. It means shares are trading at the upper band issue price of Rs XX with a premium in the grey market and may list around the same price.
