Ather Energy IPO 2025: EV Market Game-Changer?

Ather Energy’s IPO in April 2025 aims to boost R&D and expansion. Explore its premium E2Ws, market position, and future EV plans.

arbaz25-Apr-25 1:05 PM

Ather Energy IPO 2025: EV Market Game-Changer?

Company Overview

Ather Energy, based in Bangalore, designs and manufactures electric scooters, focusing on premium models with advanced features like touchscreen dashboards and fast charging. Founded by Tarun Sanjay Mehta and Swapnil Babanlal Jain, it has become a key player in India's growing E2W market.

Financial and Market Position

Ather reported revenue of ₹17,538 million in FY 2024, but incurred a loss of ₹10,597 million, reflecting its investment-heavy growth phase. Its market share reached 11.5% in FY 2024, showing strong competition, yet profitability remains a challenge.

IPO and Future Plans

The company is set to launch an IPO, opening for bidding on April 28, 2025, and closing on April 30, 2025, with listing targeted for May 6, 2025. Funds will support a new factory in Maharashtra, R&D for new products, and marketing to boost brand awareness.

Challenges

Ather faces intense competition, supply chain dependencies, and potential regulatory shifts, which could impact its growth. Despite these, its innovative approach and strategic partnerships position it well for future expansion.

Ather Energy's Journey to IPO and Beyond

Ather Energy, a Bangalore-based electric two-wheeler (E2W) manufacturer, has emerged as a significant player in India's rapidly evolving electric vehicle landscape. Founded in 2013 by Tarun Sanjay Mehta and Swapnil Babanlal Jain, the company has carved a niche for itself with its premium electric scooters, innovative technology, and ambitious growth plans. As it prepares for its initial public offering (IPO) in April 2025, Ather's journey offers a compelling narrative of innovation, financial challenges, and strategic expansion in a competitive market.

Company Background and Founding Vision

Ather Energy was established with a vision to revolutionize urban mobility through electric vehicles, focusing exclusively on E2Ws. The company's founders aimed to address the growing demand for sustainable transportation in India, leveraging the country's large two-wheeler market, which sold 18.4 million units in FY 2024, according to the CRISIL Report. Ather's headquarters in Bangalore serves as the hub for its research, development, and design activities, emphasizing a "Make in India" approach.

The company's first major milestone was the launch of the Ather 450 in June 2018, introducing industry-first features like a touchscreen dashboard, 3G SIM connectivity, and a top speed of 80 kmph—the highest among E2Ws at the time. This product set the tone for Ather's premium positioning, targeting consumers willing to pay for quality, performance, and advanced technology.

Business Model and Strategy

Ather Energy operates on a vertically integrated business model, designing approximately 80% of its E2W components in-house, including the chassis, battery packs, motor controllers, and software. This approach ensures control over quality, cost, and innovation, while components like motors and chargers are outsourced to maintain flexibility. The company's proprietary software, Atherstack, is a key differentiator, offering 69 features as of December 31, 2024, such as navigation, analytics, ride assistance, and safety tools, enhancing user experience and generating additional revenue (contributing 6% to total revenue with a high EBITDA margin of 53–56%).

Ather positions its products at premium price points, with two main lines: the Ather 450 series for performance and the Ather Rizta series for convenience, launched in April 2024 to target family users. The company employs an asset-light distribution model, operating through 265 experience centers and 233 service centers in India, plus additional outlets in Nepal and Sri Lanka, managed by third-party retail partners. This strategy reduces capital expenditure while ensuring scalability.

Supporting its E2Ws, Ather has developed the Ather Grid, India's widest fast-charging network for two-wheelers, with 2,616 fast chargers and 666 neighborhood chargers as of December 31, 2024, covering 314 cities and 234 districts. This infrastructure is critical for addressing range anxiety and boosting adoption, with recent partnerships like the one with Hero MotoCorp Limited in November 2023 enabling interoperability with over 3,500 public fast chargers.

Financial Performance and Market Position

Ather Energy's financials reflect the typical trajectory of a high-growth startup in a capital-intensive industry. For FY 2024, the company reported revenue from operations of ₹17,538 million, a slight decrease from ₹17,809 million in FY 2023, indicating stagnant growth that year. However, for the nine months ended December 31, 2024, revenue was ₹15,789 million, showing a 28% increase compared to the same period in 2023, driven by higher vehicle sales (107,983 units sold in nine months ended December 31, 2024, vs. 74,333 in 2023).

Despite revenue growth, Ather has consistently reported losses, with a loss before tax of ₹10,597 million in FY 2024 and ₹5,779 million for the nine months ended December 31, 2024. The company's EBITDA was negative at ₹6,494 million in FY 2024, though margins improved to (23%) for the nine months ended December 31, 2024, from (34%) in the prior year. The adjusted gross margin also saw a significant uptick to 19% in the nine months ended December 31, 2024, from 9% in FY 2024, reflecting efforts to improve unit economics despite a 77% decline in government subsidies (e.g., FAME, EMPS 2024, PM E-DRIVE) over recent periods.

In terms of market position, Ather held a 10.7% market share in the Indian E2W market for the nine months ended December 31, 2024, and 11.5% in FY 2024, making it the third and fourth largest player by volume, respectively, according to the CRISIL Report. It competes with established players like Ola Electric, TVS Motor, and Bajaj Auto, facing intense competition in a market expected to grow to 10.3–12.3 million units by FY 2031, driven by electrification trends and government support.

Funding and Investor Backing

Ather Energy has attracted significant investment from prominent backers, reflecting confidence in its growth potential. Key investors include Hero MotoCorp Limited, which holds a substantial stake and has a strategic partnership for charging interoperability, Caladium Investment Pte Ltd, National Investment and Infrastructure Fund II, and Sachin Bansal, among others. The company's funding history includes multiple rounds of equity and compulsorily convertible preference shares (CCPS), with notable issuances such as ₹6,000 million raised from the India-Japan Fund in September 2024 at ₹363 per share.

While the exact total funding raised is not specified in the RHP, the capitalization statement as of December 31, 2024, shows total equity of ₹1,080 million and borrowings of ₹11,216 million, indicating significant capital infusion. The upcoming IPO, with a fresh issue of up to ₹26,260 million and an offer for sale of up to 11,051,746 equity shares, underscores the company's strategy to raise additional capital for expansion.

IPO Details and Use of Proceeds

Ather Energy's IPO is scheduled to open for bidding on April 28, 2025, and close on April 30, 2025, with listing targeted for May 6, 2025, on the BSE and NSE. The offer includes a fresh issue of equity shares aggregating up to ₹26,260 million and an offer for sale by existing shareholders, with the offer price to be determined through a book-building process.

The net proceeds from the fresh issue will be utilized as follows:

Capital expenditure for establishing Factory 3.0 in Chhatrapati Sambhajinagar, Maharashtra: ₹9,272 million, with Phase 1 expected to add 0.5 million E2Ws per year by March 2027.
Repayment/prepayment of certain borrowings: ₹400 million.
Investment in research and development: ₹7,500 million over three years for new products like scooters and motorcycles, and improved battery and charging technologies.
Expenditure towards marketing initiatives: ₹3,000 million to enhance brand awareness and drive EV adoption.
General corporate purposes: Amount to be finalized.

This capital infusion is critical for scaling operations, enhancing R&D, and strengthening market presence, especially as Ather aims to reduce reliance on government subsidies and achieve profitability.

Future Plans and Growth Strategy

Ather Energy has ambitious plans to solidify its position in the E2W market. Key initiatives include:

Manufacturing Expansion: The company is constructing Factory 3.0 in Maharashtra, with construction starting in May 2025 and production beginning in July 2026. Upon completion, total capacity will reach 1.42 million E2Ws per year, significantly boosting output.
Product Development: Ather is investing in R&D to develop new platforms, including the EL platform for scooters and the Zenith platform for motorcycles targeting 125cc to 300cc segments. It is also exploring lithium iron phosphate (LFP) batteries and rare-earth-free motors to lower costs and enhance supply chain resilience.
Charging Infrastructure Growth: The Ather Grid will continue to expand, with recent additions of 799 chargers in the nine months ended December 31, 2024, and partnerships to ensure interoperability with other networks.
International Expansion: Having entered Nepal and Sri Lanka, Ather plans to explore further international markets, leveraging the global trend towards electrification.
Operational Efficiency: The company aims to improve unit economics by reducing Bill of Materials (BOM) costs (e.g., 31% reduction for Ather 450X 2.9 kWh since 2021) and achieving profitability through innovation and scale.

Challenges and Risks

Despite its growth, Ather Energy faces several challenges and risks, as outlined in the RHP:

Intense Competition: The E2W market is highly competitive, with players like Ola Electric, TVS Motor, and Bajaj Auto having greater financial resources and established networks. Ather's premium positioning may limit its addressable market compared to lower-priced competitors.
Supply Chain Dependencies: Ather relies on a limited number of suppliers for critical components, posing risks of disruptions or price increases, which could affect production and pricing.
Regulatory Changes: The company benefits from government subsidies (e.g., FAME, EMPS 2024), but any reduction or elimination could impact retail prices and demand. Recent changes, such as a decline in subsidies from ₹15,000 per kWh to ₹10,000 per kWh in 2023, highlight this risk.
Financial Sustainability: With accumulated losses of ₹34,949 million as of December 31, 2024, and negative cash flows from operations (₹7,171 million for nine months ended December 31, 2024), achieving profitability remains a challenge.
Legal and Compliance Risks: Ather faces outstanding litigation totaling ₹1,161.98 million, including tax disputes and regulatory notices, which could have financial implications.

Awards and Recognition

Ather's innovation and market presence have been recognized through various awards. In 2024 and 2025, the Ather Rizta won "Electric Two-Wheeler of the Year" at the Autocar Awards, and it received the "Good Design Award" from the German Design Council. These accolades underscore Ather's leadership in design and technology.

Conclusion

Ather Energy's journey from a startup to a leading E2W manufacturer in India is a story of vision, innovation, and resilience. As it approaches its IPO on April 28, 2025, the company is poised to leverage its strong brand, strategic partnerships, and ambitious expansion plans to capitalize on the growing demand for electric mobility. While challenges like competition and financial losses persist, Ather's focus on R&D, manufacturing scale, and market penetration positions it as a key player in India's transition to sustainable transportation. Investors and industry watchers will be keenly observing whether Ather can navigate these hurdles and emerge as a profitable leader in the global EV landscape.

Table: Key Financial Metrics (INR in Million, Unless Stated Otherwise)

Metric	9M Ended Dec 31, 2024	9M Ended Dec 31, 2023	FY 2024	FY 2023	FY 2022
Revenue from Operations	15,789	12,304	17,538	17,809	4,089
Loss Before Tax	(5,779)	(7,764)	(10,597)	(8,645)	(3,441)
EBITDA	(3,700)	(4,229)	(6,494)	(6,867)	(2,550)
Adjusted Gross Margin (%)	19%	9%	9%	11%	7%
E2W Market Share (%)	10.7%	11.3%	11.5%	10.6%	7.9%
Vehicles Sold (in thousands)	108	74	110	92	23

(Note: Financial data sourced from Ather Energy Limited Red Herring Prospectus, dated April 22, 2025.)