Ather Energy, the Hero-backed Indian electric two-wheeler maker, has taken a significant step towards its expansion by filing for an Initial Public Offering (IPO). The company’s Draft Red Herring Prospectus (DRHP), submitted to the Securities and Exchange Board of India (SEBI), outlines plans to raise ₹3,100 crore ($369.4 million) through the fresh issue of shares.
Ather Energy’s growth has been significantly bolstered by its key investor, Hero MotoCorp, which holds a 37.2% stake in the company. Hero MotoCorp, the world’s largest two-wheeler manufacturer, has provided Ather with crucial backing both in terms of financial support and industry expertise. Despite being Ather’s largest shareholder, Hero MotoCorp has opted not to participate in the offer-for-sale (OFS) component of the IPO. The IPO itself will consist of both a fresh issue of shares and an offer-for-sale by existing investors and key shareholders. Notably, Ather’s co-founders, Tarun Mehta and Swapnil Jain, will also sell a portion of their stakes, although the sale represents a small fraction of their holdings.
The fresh capital raised from the IPO will be primarily directed towards expanding Ather’s production capabilities and funding research and development initiatives. Furthermore, funds will also be deployed towards the establishment of a new electric two-wheeler manufacturing facility in Maharashtra, India. This new plant will complement Ather’s existing facility in Hosur, Tamil Nadu, allowing the company to significantly scale up production in response to the growing demand for electric vehicles.
This development comes at a time when Maharashtra, a state with high electric vehicle penetration, has emerged as a strategic location for Ather’s expansion. The company’s new factory in the region will provide easier access to a robust automotive supplier base, making it a critical investment for the future.
Still, while Ather Energy has made considerable progress in establishing itself as a key player in the Indian EV market, the company has faced financial challenges in recent years. Ather’s financial performance for the fiscal year 2024 revealed a revenue of ₹1,754 crore, but the company reported a net loss of ₹1,060 crore during the same period. Despite these losses, Ather’s customer base continues to grow, reflecting strong demand for its products. The company reported a 34% increase in its customer base in FY24, reaching a total of 1,14,000 customers. However, Ather faces stiff competition in the market, particularly from Ola Electric, which leads the electric two-wheeler sector with a 49% market share. In comparison, Ather holds a 9% market share as of Q1 FY25.
Ather Energy’s IPO is taking place against the backdrop of a rapidly growing electric vehicle market in India. The country’s push for sustainable transportation has been largely driven by government incentives, rising fuel prices, and growing environmental consciousness among consumers. India aims to have 30% of its private cars and 70% of its commercial vehicles powered by electricity by 2030. In recent years, India’s EV market has attracted significant investor interest, with numerous companies opting for public listings. In August 2023, Ola Electric made a high-profile debut on the stock exchange, raising Rs 734 crore in one of the country’s largest IPOs.
