Ather: India's Future-Ready Premium Pure-Play EV Player with Balanced Valuation

Ather Energy Limited (Ather), a pioneer in the Indian electric two-wheeler (E2W) market and a pure play EV company that designs all its products ground-up, will open its IPO on Monday, 28 April 2025. Ather is generally positioned as a premium EV brand compared to its peers, particularly Ola Electric. The balanced valuation of the truly future-ready pure-play EV major have got analysts of broking firms scurrying for discovering new valuation metrics for growth-seeking loss-making Unicorns and put investors in a tizzy.

As Ventura analysts put it aptly - Ather Energy "Designs and manufactures premium E2W and builds a robust charging infrastructure to accelerate India's transition to sustainable mobility." Other analysts say that EV is the future and Ather has set new benchmarks in redefining what a pure-play EV mobility company should really and truly be!

Retail/HNI investors may take cues from informed investors and their approach to Ather’s IPO. Marquee Global and Domestic Investment firms subscribed to Ather’s anchor book on Friday 25 April helping Ather to raise Rs. 1,340 crore out of the total public issue size of Rs. 2,981 crore. Ather's IPO Anchor Book was fully subscribed, signaling strong institutional confidence.

SBI Mutual Fund led the pack with shares allocated worth ₹310 crores, besides Franklin Templeton Global, Aditya Birla Sun Life MF, Abu Dhabi Investment Authority, Singapore headquartered global asset manager Eastspring Investments, and Invesco MF being other investors who were allocated shares more than ₹100 crores each.

Some of the key anchor investors who were allocated shares are Custody Bank of Japan, ICICI Prudential MF, Morgan Stanley Investment Management (MSIM), Samir Arora backed Helios MF, ITI MF, Union MF, Tata Investment, Subhkam Ventures, a privately managed family office, Societe Generale and BNP Paribas Financial Markets, etc.

Many brokerage houses have given ‘Subscribe’ recommendation. Bajaj Broking recommended 'Subscribe to the IPO with a long-term perspective'. The company benefits from strong parentage, which remains its key strength. Considering its current financials, this appears to be a long-term investment story, and therefore, only well-informed investors with surplus funds and a long-term perspective may consider investing moderately, the report said.

Ventura report recommends "Subscribe for Listing Gains" stating that “Its premium focus, Ather Grid and R&D driven innovation differentiates it from competitors. Company is going through major capex with its Ather Factory 3.0 (will have 10 Lakhs unit capacity with 5 lakh in phase 1 by mid FY26). This comes despite challenges such as subsidy cuts and low-capacity utilization.

Nuvama report said that Ather Energy is a beneficiary of the mega EV trend and added "its reported 9MFY25 revenue of INR15.8bn, with an annualised FY25 valuation of <6x P/S at the top end of IPO valuation of INR 119.6bn.

Arihant Capital report said "Subscribe for listing gain". While the reduction of government subsidies has been a challenge, the company has managed to improve its profitability metrics and reduce subsidy dependence. At the upper band of INR 321, the issue is valued at a EV/sales ratio of 5.65x, based on a 9MFY25 Sales of INR 15,789 Mn, the report said. Ather Energy is strongly positioned in India’s fast-growing electric two-wheeler market, backed by its early-mover advantage, premium product positioning, and a robust in-house R&D and technology ecosystem. The company’s recent launches, like the Ather Rizta, have helped expand its customer base. Its upcoming Factory 3.0 will significantly increase production capacity from 420,000 to 1.42 Mn units by FY27, while ongoing BOM Cost reductions and R&D investments are expected to improve margins further. Management expects industry-wide E2W sales in India to grow at around 41–44% CAGR until FY31, and Ather aims to tap into this by growing its product range, reducing costs through localisation and new battery technologies, and increasing software monetisation opportunities.

IDBI Capital's report stated that Ather continues to expand its production capacity and R&D footprint, underpinned by a commitment to sustainability and sound corporate governance. In FY24 the company reported net sales/EBITDA/PAT of Rs17.5bn/Rs-6,847mn/ Rs-10,597mn respectively. At upper price band and diluted equity, IPO is priced at 6.2x EV/Sales on FY24.

Sushil Financial report said that "The company has potential to grow as the electronic vehicle industry is taking the pace and it also has strong parentage. Looking at all the factors, risks, opportunities and valuation, the risk savvy investors may invest with long term horizon."

The revenue from operations of Ather grew by 329% between FY2022 and FY2024, and by 28% between the 9 months ended December 31, 2024, and December 31, 2023, as per Axis Capital report. The 9MFY25 losses came down by nearly 25% on a YoY basis (Rs 577 crore from Rs 776 crore). Ather will continue its focus on unit economics.

Ather has strong growth and margin improvement track record. Vehicle sales have grown 45% to 107983 in 9MFY25 units from 74,333 units in 9MFY24. The adjusted gross margins more than doubled to 19% in 9MFY25 from 9% in 9MFY24. The Company focused on improving gross margins through the reduction of the BOM cost of their E2Ws through investments in the R&D capabilities and technologies. While Ather’s market share is steadily growing, this is converging as the market share of its comparable peer is falling.

Analysts also point out that Ather isn’t impacted much with government subsidiaries coming down; its margins are intact and could have been much higher if subsidies were in place.