Ather Energy IPO: Top-10 factors that can influence you decision to subscribe or avoid it

The IPO of Ather Energy, the first mainboard primary offering of the financial year 2025-26, opened for bidding on Monday, April 28 and can be subscribed till Wednesday, April 30. The Rs 2,980 crore offering its being sold in the range of Rs 304-321 apiece with a lot size of 46 equity shares and its multiples thereafter.

The issue has received a mixed view from the brokerage firms, which have cited multiple reasons for their ratings on it. Some have a positive view on the issue suggesting to subscribe for it, while others have an 'avoid' rating on the issue. Here' are 10 factors cited by the analysts, along with their ratings and rationale, which can help you take a call for this IPO:

1. Valuations
Ather Energy is well-placed to capitalize growth in E2W Industry led by strong DNA of innovation and engineering, but the path to profitability seems long and full of challenges, said DR Choksey Finserv. Ather is currently offered at a EV/Sales valuation of 6 times, which appears overvalued. It has assigned an 'avoid' rating to the IPO suggesting to 'buy' the stock post listing at attractive valuation post listing.

2. PLI Scheme benefits
Ather Energy has not got benefits under the Production Linked Incentive (PLI) scheme, ensuring margin stability despite potential regulatory changes, said CanMoney, which has a 'neutral' view on the IPO. The upcoming lineup of the cost-effective EL platform in the scooter segment and the Zenith platform in the bike segment might help Ather to get a further boost in its business, it said

3. Intense Competition
 The competition is intensifying in the electric two-wheeler industry with established OEMs such as TVS Motors, Bajaj Auto and Hero MotoCorp expanding their respective E-2W product portfolio and the distribution network, said SBI Securities, which has an 'avoid' rating on the issue.

4. Capacity Utilization
Capacity utilisation at Ather's Hosur plant remains low at 39 per cent for E2Ws and 41 per cent for battery packs as of December 2024, said Chola Securities. Despite this underutilisation, Ather plans to invest Rs 927 crore to set up Factory 3.0 in Maharashtra with 500,000 units capacity, raising concerns over capital efficiency," it said. Chola has an 'avoid' rating for this issue.

5. Debt levels
Ather Energy has increased its debt from Rs 30.9 crore in FY24 to Rs 160.2 crore in 9MFY25, raising concerns about its financial sustainability, said StoxBox by BP Equities. "Given the rising debt levels and persistent loss-making status, we recommend an 'avoid' rating. We will reassess our recommendation if there is a sustained improvement in financial metrics in future," it added.

7. Market share & Financials
Ather’s E2W market share has declined to 10.7 per cent in 9MFY25 from 11.5 per cent in FY24, while other peers like Ola electric TVS Motors and Bajaj Auto grew in the aforementioned period, said Chola Securities. Ather’s revenue from operations declined to Rs 1,753.8 crore in FY24, down from Rs. 1,780.9 crore in FY23, reflecting lower blended realization, it adds.

Ather's financial performance has resulted in a negative PE ratio, and its borrowings stood at over Rs 1121 crore as of December 31, 2024, which is a point of concern, said Bajaj Broking. Considering its current financials, it appears to be a long-term investment story and only well-informed investors with surplus funds and a long-term view may consider investing," it said.

8. R&D based asset light model
Ather employs a hybrid distribution model based on asset light model. "Ather invests heavily in R&D to innovate in battery technology, software, and vehicle design, with 48 per cent of its 3,260 employees dedicated to R&D," said Ventura Securities, recommending subscribe for listing gains.

9. Premium products range
Ather Energy is strongly positioned in India’s fast-growing electric two-wheeler market, backed by its early-mover advantage, premium product positioning, and robust in-house R&D and technology ecosystem, said Arihant Capital Markets, with a 'subscribe for listing gain' rating for this issue.

10. Growth Potential
SMIFS has recommend to subscribe to the issue as a high risk - high return long term investment, with the E2W industry in India poised for more than 100 per cent CAGR over the next 5-7 years and the enhanced addressable market beyond south India - which contributes to 33 per cent of all India 2W sales, coupled with stronger R&D capabilities and higher capacities.