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Ather Energy, the Bengaluru-based electric two-wheeler manufacturer, is set to debut on the NSE and BSE on Tuesday, May 6, 2025. The IPO, which concluded on April 30, was subscribed 1.43 times overall, with retail investors subscribing 1.78 times. The IPO price band was set between ₹304 and ₹321 per share.
As of May 5, the grey market premium (GMP) for Ather Energy shares stands at ₹7, suggesting a potential listing price of around ₹328, a modest 2.18% above the issue price.
Reasons behind the modest premium
Several factors contribute to the cautious optimism surrounding Ather Energy's IPO:
- Valuation concerns: Analysts have raised concerns about Ather's valuation, noting that its EV/Sales ratio of 6x is higher than peers like Bajaj Auto (5.4x), TVS Motor (3.5x), and Hero MotoCorp (2.7x).
- Profitability challenges: Ather reported a net loss of ₹577.9 crore for the nine months ending December 2024, highlighting ongoing profitability challenges.
- Negative cash flow: The company has reported negative cash flows in recent years, raising concerns about its liquidity position.
- Competitive market: Despite being an early entrant, Ather's market share in the electric two-wheeler segment has seen marginal declines, with increased competition from players like Ola Electric and TVS.
- Dependence on government incentives: Ather's growth is closely tied to government policies and incentives for electric vehicles, making it vulnerable to policy changes.
What it means for investors
Investors should approach Ather Energy's listing with cautious optimism. While the company's focus on electric mobility aligns with future transportation trends, the current financial metrics and market conditions suggest a need for careful evaluation. Long-term investors may consider monitoring the company's performance post-listing before making significant commitments.
Final takeaway
Ather Energy's upcoming listing marks a significant milestone in India's electric vehicle sector. However, the modest grey market premium and underlying financial concerns indicate that investors are adopting a wait-and-watch approach. As the company navigates its post-IPO journey, its ability to achieve profitability and sustain growth will be critical in determining long-term investor confidence.
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Disclaimer: This story was created with the assistance of artificial intelligence and is intended for informational purposes only. Please take it with a pinch of salt and do your own research or consult a financial advisor before making investment decisions.
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