Ather Energy IPO: Next Zomato or Paytm?
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An IPO is hitting the Indian market after 2 months, and it is an interesting one! At least for me. I have been tracking the company for a while now in the EV space. One of the primary reasons I am interested in the company is the positive user feedback - the company has been able to create a positive image without spending crazy money on marketing.
The is going live next week, and I studied the RHP in detail, and thought to share some key insights about the money, so you can decide whether to invest in the company/IPO or not.
How IPO money will be used?
One of the key things I look in the IPO is how the funds will be used by the company. And first of all, will the funds go to the company or is it offer for sale only.
Ather Energy IPO will have both - OFS and fresh issue and the fresh issue will be used for below:
Ather plans to utilise Rs 927.2 crore out of the fresh funds it looks to raise for setting up an E2W factory in Maharashtra.
Rs 40 crore will be used to repay or pre-pay certain borrowings availed by the company
Rs 750 crore towards research and development and Rs 300 crore for expenditure towards meeting marketing initiatives.
The remaining funds will be used for general corporate purposes.
About the company
I will not go into the details much - you can check that offline. But here is quick overview - Ather Energy is a pioneer in the Indian electric two-wheeler market, according to the CRISIL Report. They are a pure play EV company that sells E2Ws and the associated product ecosystem, comprised of software, charging infrastructure and smart accessories, all of which are conceptualised and designed by them in India.
What is market opportunity for the company?
1. India Leads the Global 2W Market
India was the world’s largest motorised 2W market in CY2023.
FY24 domestic sales reached 18.4 million units, with 11% YoY growth in the 9 months ending Dec 2024.
Expected to grow at ~7% CAGR to reach 29–30 million units by FY31.
2. Strong Exports & Rising Middle-Class Demand
Exports formed ~17% of total sales in the 9M FY24 (3.1 million units), mainly to Africa, Asia, and North America.
India’s middle class to rise from 432M (FY21) to 715M (FY31), fueling demand for premium 2Ws.
3. Shift Toward Premium 2-Wheelers
2Ws with 125cc+ engines now dominate: from 38% (motorcycles) and 20% (scooters) in FY19 to 53% and 48% respectively in FY24.
Driven by youth demand, tech features, and better financing.
4. Electric 2-Wheelers (E2Ws) Gaining Ground
E2W penetration reached 5.5% (0.84M units) in 9M FY24; e-scooters alone at 15.2%.
E2Ws now offer 52% lower TCO than ICE 2Ws for ~8,000 km/year usage.
EV scooter penetration could reach ~70% by FY31, motorcycles ~10%.
5. India’s Global EV Opportunity
Indian E2Ws have a chance to capture a larger share of the 80–82M global 2W market by 2029.
Success will depend on software, design, quality, unit economics, and resilient supply chains.
Company’s Competitive Strengths
1. Tech-First Innovation Leadership
Ather pioneered many E2W industry-firsts in India — from touchscreens and traction control to its own fast-charging network and smart helmets.
Strong in-house R&D and software stack (Atherstack) give it full control over product development and innovation.
2. Premium Positioning & User-Centric Experience
Ather’s scooters are priced at a premium, supported by top-notch quality, 4,500+ component tests, and a software-driven ecosystem like Trip Planner.
Its customer-focused retail and service model includes experience centers, quick service turnaround, and ExpressCare for rapid servicing.
3. In-House Design & Fast Product Iteration
With full control over key components and software, Ather brings new models and upgrades quickly (204 changes in FY24 alone).
Its agile design has helped cut costs (like 51% BOM cost savings on motor controllers) and mitigate supply chain disruptions.
4. Capital-Efficient & Flexible Business Model
Ather maintains a lean, flexible model with lower cash burn than peers, smart working capital cycles (48 days in 9M FY24), and low up-front capital risk.
This model supports long-term sustainability and adaptability to tech or market shifts.
Ather Energy’s Financials
Profitability & Margins
Losses have narrowed slightly in 9M FY24: ₹(5,779) million vs ₹(7,764) million in 9M FY23.
EBITDA margin improved from -34% to -23%, showing progress toward operational efficiency.
Despite this, FY24 YTD profit margin remains negative at -36% (vs -62% in 9M FY23).
Revenue & Sales Mix
Revenue per vehicle sold dropped to ₹129,001 in 9M FY24 (from ₹148,180 in 9M FY23).
Vehicle sales make up 88% of revenue, with 12% coming from non-vehicle sources like accessories, services, etc.
Adjusted Gross Margin
Significant improvement from 9% to 19% in 9M FY24, indicating better cost control or improved pricing power.
Working Capital & Operational Efficiency
Working capital days have improved significantly to (48) days in 9M FY24 vs (21) days in 9M FY23.
Indicates faster inventory turnover or improved receivables/payables management.
Market Share
Ather’s E2W market share slightly declined to 10.7% in 9M FY24 from 11.3% in 9M FY23.
FY23 ended with a share of 10.6%, showing relatively stable but slightly declining share.
My Final Thoughts
The Ather Energy IPO has definitely caught my attention. As someone who closely follows the EV ecosystem in India, I see Ather as more than just a scooter manufacturer — it’s a tech-first mobility brand with deep R&D roots and a clear edge in innovation. From launching India’s first touchscreen-enabled electric scooter to building its own fast-charging network, Ather has consistently been ahead of the curve.
Yes, the financials are still in the red, but the premium positioning, capital-efficient model, and focus on product control give me confidence in its long-term potential. If you're betting on the future of urban mobility in India, Ather deserves serious consideration.
Will I invest?
The company has set of price band of Rs 304 to Rs 321, which gives it a valuation of $1.4 billion. With no profits and short history of business, it is difficult to say YES to the company with full confidence. However, given the progress, the company is worth tracking. I would probably wait for the share price to fall like it has in case of Ola Electric post listing. For sure, the company will be on my radar but taking position in it - only time will tell.
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