'A ₹50 crore payoff': How IIT Madras turned a ₹29 lakh bet into a massive Ather Energy windfall

When Ather Energy lists on the stock market this week, it won't just be founders or investors celebrating. Quietly, and spectacularly, IIT Madras will walk away with one of the biggest wins of all.

Financial advisor Aditya Kondawar captured it perfectly on LinkedIn: “The biggest winner in the Ather IPO is IIT-Madras Incubation Cell (IITMIC)!”

For an initial investment of just ₹15–29 lakh, IIT Madras' incubation arms—through IITMIC and IITMS Rural—now sit on shares worth ₹50 crore. That’s a jaw-dropping return of 172x to 333x in just 11 years, a feat that would make even seasoned venture capitalists envious.

In its early days, Ather Energy had allotted 5% of its paid-up share capital to IIT Madras Incubation Cell (IITMIC) and the IITM Rural Technology and Business Incubator (RTBI) in exchange for office space, mentorship, and access to resources. Both entities operate from within the IIT Madras campus and often collaborate on startup investments.

According to the red herring prospectus (RHP), the two incubation cells currently hold a combined 15.58 lakh shares in Ather. At the IPO’s upper price band of ₹321 per share, this stake is valued at around ₹50 crore.

Under the offer for sale (OFS), IITMIC will offload 31,050 shares and RTBI will sell 4,191 shares.

Kondawar also noted IIT Madras' wider success in the startup ecosystem: “IIT Madras Incubation Cell (IITMIC) has an 80% success rate with startups!”

As of the end of 2023, IITMIC’s portfolio included 351 deep tech startups valued collectively at ₹45,000 crore ($5.4 billion), creating around 8,000–9,000 direct jobs.

"The survival rate of IITMIC-backed startups is 80%, compared to the typical 4–6%. IITMIC holds a 1% equity stake in many companies," writes Kondawar, adding that the entity generates ₹50–60 crore annually from its equity stakes.

Around 25% of IITM’s 550 faculty members are actively involved in the research park.

It’s not just IIT Madras celebrating. Several early investors in Ather Energy are set to reap major gains.

Tiger Global, which invested in 2015, is poised to earn 8.3x returns through its arm, Internet Fund Pte, by selling about 4 lakh shares in the OFS.

Singapore’s sovereign wealth fund GIC (via Caladium Investment) and India’s National Investment and Infrastructure Fund (NIIF)—both investors since 2022—are expected to clock returns of 1.6x and 1.7x, respectively.

As Ather Energy prepares for its next phase, investors are also keen to assess the broader electric vehicle (EV) market. Here’s what Zerodha highlights as key factors when analyzing EV companies (and not just Ather):

• Lithium price movement: Lithium, cobalt, and nickel prices impact EV battery costs, which in turn affect vehicle pricing.
• Supply chains: EV makers are heavily reliant on China for battery cells. China, in turn, sources minerals from countries like Chile, Bolivia, and Australia. Any global disruption—like COVID—can impact production and revenue. For Ather, China accounts for 28% of input costs.
• Government subsidies: EV incentives are declining. Ather’s average selling price fell from ₹1.58 lakh in FY22 to ₹1.43 lakh in FY24 due to reduced subsidies.
• Product quality and efficiency: Charging times, safety, and performance are critical to gaining customer trust in the EV space.
• Demand shifts: Electric two-wheelers must grow faster than traditional fuel bikes to increase their market share.
• Segment performance: For companies making both petrol and electric vehicles, it's important to track EV sales separately. For instance, TVS Motors gets around 6% of its sales from EVs, but EV volumes grew at 40% versus 12% for petrol bikes over nine months to December 2024.