Ather IPO Sees Lukewarm Response Amid Mixed Brokerage Calls

After much-anticipation over India’s second EV IPO, Ather Energy’s public issue closed with an oversubscription of 1.43X today.

The IPO received bids for 7.65 Cr shares as against 5.34 Cr shares on offer. As had been the case for the initial two days, employees led the investor interest. The company’s employees bid for 5.42 Lakh shares, resulting in 5.43X subscription.

Retail investors’ interest also remained strong on day three. They placed bids for 1.73 Cr shares against the 97.34 Lakh shares reserved for them, resulting in an oversubscription of 1.78X. 

Qualified institutional buyers’ (QIB) interest picked up on the final day, as is usually the case, with these investors overbidding their quota by 70%. The QIBs bid for 4.91 Cr shares against the 2.89 Cr shares reserved for them. Mutual funds placed the highest number of bids at 3.41 Cr shares. 

However, non-institutional investors’ (NIIs) response was muted.

The portion reserved for them was subscribed just 66%, receiving bids for 96.27 Lakh shares as against 1.46 Cr shares on offer.

With this, the IPO closed on a lukewarm note compared to the public issues of new-age tech startups last year. For instance, Ather’s rival Ola Electric’s IPO was oversubscribed 4.27X in August last year, with the QIB portion seeing the highest oversubscription. Despite this, shares of Ola Electric listed flat at the IPO price of INR 76. 

Behind the muted response for Ather’s IPO was the current market conditions and mixed calls given by brokerages.

Brokerages Divided On Ather Energy IPO

In its IPO note, SBI Securities gave an ‘Avoid’ call for Ather, citing the fact that the EV company is yet to achieve profitability at EBITDA and PAT levels. 

While the company’s bottom line continues to be in the red, the brokerage noted that the competition in the EV two wheeler industry is intensifying.

While the market is already dominated by the likes of TVS Motor, Bajaj Auto and Hero, the introduction of Honda Activa’s EV variant will make the road more cluttered for Ather, it said. 

In the nine-months ended December 2024, Ather managed to trim its net loss by 26% to INR 577.9 Cr from INR 776.4 Cr in the year-ago period. For the full fiscal year FY24, the company’s loss stood at INR 1,059.7 Cr.

Meanwhile, KR Choksey advised users to avoid Ather’s public issue due to valuation concerns. “Ather is currently offered at a EV/Sales valuation of ~6x, which appears overvalued to us. We assign an “AVOID” rating and believe that it can be bought at an attractive valuation in the secondary market,” the brokerage said. 

However, Bajaj Broking recommended investors to subscribe to the IPO with a long term focus. “Only well-informed investors with surplus funds and a long-term perspective may consider investing moderately,” it said. 

On the other hand, Ventura recommended investors to subscribe to the IPO for listing gains.  

Hem securities remained Neutral on Ather’s listing. While it believes that the IPO was fairly priced, its concerns result from the ongoing market turmoil. 

Ather’s listing, which is expected to take place on May 6, comes amid a global tariff war and geopolitical tensions. While the Indian equity market was upbeat over the last few weeks on easing tariff concerns, the rising tensions between India and Pakistan after the terrorist attack in Jammu and Kashmir’s Pahalgam has cast a shadow of uncertainty.