India's Consumer EV Market Remains Resilient Amid Tariff Challenges, Ather Energy Reports

Ather Energy, an electric two-wheeler manufacturer, has announced its IPO with a price range of Rs 304 to Rs 321 per share. The IPO, valued at Rs 2,981 crore, will be open for public subscription from April 28 to April 30. The offer includes a sale portion worth approximately Rs 355 crore. Despite ongoing tariff issues, Ather remains optimistic about India's consumer and EV market.

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India's EV Market Resilience

Tarun Mehta, Ather Energy's Co-founder and CEO, stated that the Indian EV sector is driven by factors like lower ownership costs and ease of use. He noted that US tariffs have minimal impact on this growth. Mehta emphasised that the shift from petrol to electric vehicles remains unchanged. The domestic EV industry is not heavily reliant on exports to the US, focusing instead on other markets.

Strategic Expansion and Growth

Ather plans to expand its distribution network to drive growth. The introduction of the Rizta model has opened new markets in India, previously inaccessible to the Ather 450 scooter. Mehta expressed confidence in this strategy, highlighting that distribution expansion will fuel near-term growth, while product expansion will support mid-to-long-term growth.

Investment in Local Production

Mehta mentioned a decline in import reliance, particularly for lithium-ion cells. Several companies are investing in local production facilities for these cells. Ather is optimistic about this trend continuing in India. The company focuses on long-term strategies like brand building and governance, which are well-received by the market.

Future Product Platforms

Ather is developing two new platforms: EL for scooters and Zenith for motorcycles. EL aims to create cost-efficient scooter architectures, while Zenith targets motorcycles in the 125-300 cc range. These platforms are part of Ather's strategy to expand its product offerings and capture a larger market share.

IPO Details and Market Position

The IPO aims to raise funds for a new factory in Maharashtra and debt reduction. At the upper price band, Ather's valuation stands at Rs 11,956 crore. This makes it the second electric two-wheeler company to go public after Ola Electric Mobility's IPO last year. Ather has allocated 75% of its issue for institutional buyers, 15% for non-institutional investors, and 10% for retail investors.

Adjustments in IPO Size

Initially planning to raise Rs 3,100 crore through the IPO, Ather reduced its size due to existing shareholders selling fewer shares than expected. Mehta explained that while the secondary component was cut by 50%, the primary component was only reduced by 12%, mainly affecting debt repayment plans due to strong internal accruals.

Ather Energy continues to enhance its research and development capabilities. The company recently expanded its R&D and testing facilities at its product testing centre. Axis Capital, JM Financial, Nomura Financial Advisory and Securities India, and HSBC Securities & Capital Markets are managing the IPO as lead managers. The company's equity shares are expected to list on stock exchanges on May 6.