Ather Energy IPO: How It Compares to Listed Electric Two-Wheeler Players

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Ather Energy, a Bengaluru-based electric vehicle (EV) startup founded in 2013 by IIT Madras alumni Tarun Mehta and Swapnil Jain, is set to make its mark on India’s capital markets with its initial public offering (IPO). The IPO, scheduled to open on April 28, 2025, and close on April 30, 2025, aims to raise approximately ₹2,981 crore through a combination of a fresh issue of ₹2,626 crore and an offer for sale (OFS) of 1.1 crore equity shares, with a price band of ₹304–₹321 per share. The company, backed by Hero MotoCorp, plans to list on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) on May 6, 2025. This move positions Ather as the second EV startup to go public in India, following Ola Electric, and comes at a time when the electric two-wheeler (E2W) market is witnessing rapid growth driven by government incentives, rising fuel costs, and environmental awareness.

Ather Energy’s IPO has generated significant buzz among investors, but how does it compare to listed players in the E2W industry, such as Ola Electric, TVS Motor Company, Bajaj Auto, and Hero MotoCorp? This article provides a detailed analysis of Ather’s financials, market position, product offerings, and growth prospects, benchmarking it against its competitors to help investors evaluate its potential.

Ather Energy: Business Overview

Ather Energy specialises in designing, manufacturing, and selling premium electric scooters, including the Ather 450 series (450x, 450s, 450 Apex) and the family-oriented Ather Rizta. The company is known for its in-house research and development (R&D), vertically integrated manufacturing, and a robust charging infrastructure network called Ather Grid, which comprises over 2,500 fast chargers across 230 cities. Ather’s scooters are positioned as premium, tech-driven products with features like touchscreen dashboards, cloud connectivity, over-the-air (OTA) updates, and smart diagnostics.

As of March 31, 2024, Ather held an 11.4% market share in India’s E2W market, ranking fourth behind Ola Electric (35.1%), TVS Motor (11.4%), and Bajaj Auto (11.4%). The company sold 1,09,577 units in FY24, a significant increase from 76,114 units in FY23, reflecting growing consumer acceptance. Ather operates 208 experience centres and 191 service centres in India, with a manufacturing facility in Hosur, Tamil Nadu, capable of producing 420,000 units annually. The IPO proceeds will fund a new factory in Maharashtra, R&D, debt repayment, and marketing initiatives.

Industry Context: The Electric Two-Wheeler Market

India’s E2W market is poised for exponential growth, driven by favourable government policies like the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme, state-level subsidies, and increasing consumer demand for sustainable mobility. The market is expected to grow at a 41% compound annual growth rate (CAGR) from FY24 to FY31, with EV penetration rising from 5.1% in FY24 to 35–40% by FY31, translating to 10.2 million units annually. Public charging infrastructure is projected to expand at a 35–38% CAGR, supporting this growth.

However, the sector faces challenges, including high initial costs, dependence on imported battery components, and the need for extensive charging networks. Competition is intensifying, with new entrants like Honda Motorcycles and Scooters India and Suzuki planning to launch electric scooters, alongside established players scaling their EV portfolios.

Ather Energy’s Financial Performance

Ather Energy’s financials reflect its growth-stage status, characterised by high investments and losses. In FY24, the company reported:

• Revenue: ₹1,753.8 crore, slightly down from ₹1,780.9 crore in FY23, indicating flat growth.
• Net Loss: ₹1,059.7 crore, up 22% from ₹864.5 crore in FY23, driven by R&D and operational expenses.
• Total Assets: ₹19,135 crore as of March 2024, bolstered by investments in manufacturing and R&D.
• Loss per Share: ₹47, reflecting capital inefficiency.
• Return on Net Worth: Negative 194%, underscoring its pre-profitability phase.
• Net Asset Value per Share: ₹24, significantly lower than competitors.

For the nine months ending December 2024, Ather reduced its loss to ₹578 crore from ₹776 crore the previous year, driven by strong sales of the Ather Rizta. The company’s average selling price (ASP) of ₹1.59 lakh per vehicle is higher than Ola Electric’s ₹1.52 lakh, yielding 5% higher profit margins per vehicle.

Ather’s IPO valuation, at ₹11,956 crore at the upper price band, implies a price-to-sales (P/S) multiple of approximately 6.8x based on FY24 revenue. This is lower than Ola Electric’s 10x P/S multiple post-listing but reflects Ather’s smaller scale and lack of profitability.

Comparison with Listed Players

To assess Ather Energy’s IPO, we compare it with four listed competitors: Ola Electric, TVS Motor Company, Bajaj Auto, and Hero MotoCorp. These companies vary in scale, market positioning, and financial resilience, offering a comprehensive benchmark.

1. Ola Electric

Business Overview: Ola Electric, listed on August 9, 2024, is India’s leading E2W player, with a 35.1% market share in FY24. Its S1 series scooters target a broad customer base, supported by aggressive pricing and extensive marketing. Ola operates its battery cell manufacturing plant, giving it a cost advantage. The company sold 3,30,000 units in FY24, three times Ather’s volume.

Financials:

• Revenue: ₹5,009.8 crore in FY24, nearly three times Ather’s ₹1,753.8 crore.
• Net Loss: ₹1,584.4 crore, higher than Ather’s ₹1,059.7 crore, reflecting heavier R&D and expansion costs.
• Loss per Share: ₹4, significantly lower than Ather’s ₹47.
• Net Asset Value per Share: ₹6, compared to Ather’s ₹24.
• P/S Multiple: 10x, based on a market cap of ₹50,000 crore post-listing.

Strengths:

• Market leadership with a 35.1% share, driven by scale and pricing.
• Backwards integration through in-house battery manufacturing.
• Strong brand recall and distribution network.

Weaknesses:

• Higher cash burn ($538 million vs. Ather’s $240 million cumulative).
• Negative gross margins in FY24, unlike Ather’s marginal profitability per vehicle.

Comparison: Ola Electric outpaces Ather in market share, revenue, and scale, but faces similar profitability challenges. Ather’s lower cash burn and premium positioning offer a competitive edge, but its smaller scale and lack of battery manufacturing limit its pricing power.

2. TVS Motor Company

Business Overview: TVS Motor, a legacy automaker, has emerged as a strong E2W player with its iQube series, capturing an 11.4% market share in FY24, equal to Ather’s. TVS benefits from a diversified portfolio, including internal combustion engine (ICE) vehicles, and an extensive dealership network across 1,000+ cities.

Financials:

• Revenue: ₹39,144 crore in FY24, dwarfing Ather’s ₹1,753.8 crore.
• Net Profit: ₹2,231 crore, with a return on net worth of 26%.
• Earnings per Share: ₹47, contrasting with Ather’s ₹47 loss per share.
• Net Asset Value per Share: ₹182, significantly higher than Ather’s ₹24.

Strengths:

• Financial resilience from ICE vehicle profits, offsetting EV losses.
• Extensive distribution and service network.
• Strong R&D capabilities, with investments in EV platforms.

Weaknesses:

• Slower EV penetration compared to Ola Electric.
• Less focus on premium, tech-driven features than Ather.

Comparison: TVS Motor’s scale and profitability provide a stark contrast to Ather’s growth-stage losses. However, Ather’s focus on premium scooters and fast-charging infrastructure (Ather Grid) gives it a technological edge, while TVS leverages its legacy strengths.

3. Bajaj Auto

Business Overview: Bajaj Auto, another legacy player, has gained traction in the E2W market with its Chetak electric scooter, holding an 11.4% market share in FY24. Bajaj benefits from a diversified portfolio, international markets, and a widespread dealership network.

Financials:

• Revenue: ₹44,870 crore in FY24, the highest among peers.
• Net Profit: ₹8,159 crore, with a return on net worth of 29%.
• Earnings per Share: ₹273, compared to Ather’s ₹47 loss.
• Net Asset Value per Share: ₹935, far exceeding Ather’s ₹24.

Strengths:

• Financial stability from ICE vehicle sales.
• Strong brand and distribution network.
• Gradual expansion of EV portfolio.

Weaknesses:

• Lower EV penetration compared to Ola and Ather.
• Limited focus on advanced connectivity features.

Comparison: Bajaj Auto’s financial strength and scale overshadow Ather’s nascent operations. However, Ather’s first-mover advantage in smart scooters and its charging network provide differentiation, while Bajaj relies on its legacy infrastructure.

4. Hero MotoCorp

Business Overview: Hero MotoCorp, India’s largest two-wheeler manufacturer, holds a 5.7% E2W market share with its Vida V1 scooter. As Ather’s largest shareholder (37.2% stake), Hero is a co-promoter in the IPO but will not sell shares. Hero’s vast ICE vehicle portfolio and 6,000+ touchpoints give it unmatched reach.

Financials:

• Revenue: ₹37,788.6 crore in FY24.
• Net Profit: ₹3,970 crore, with a return on net worth of 21%.
• Earnings per Share: ₹187, vs. Ather’s ₹47 loss.
• Net Asset Value per Share: ₹884, compared to Ather’s ₹24.

Strengths:

• Unrivalled distribution network and brand equity.
• Financial stability from ICE vehicles.
• Strategic investment in Ather, diversifying EV exposure.

Weaknesses:

• Declining E2W market share (down from 30% in 2021).
• Late entry into the EV space.

Comparison: Hero MotoCorp’s scale and profitability contrast with Ather’s losses, but its declining E2W share highlights challenges in competing with newer players. Ather’s premium positioning and technological innovation complement Hero’s mass-market approach.

Ather Energy’s Strengths and Weaknesses

Strengths

• First-Mover Advantage: Ather launched India’s first smart electric scooter (Ather 450) in 2018, establishing a premium brand.
• Ather Grid: India’s largest E2W fast-charging network, with 2,500+ chargers, enhances customer experience.
• In-House R&D: Investments of ₹520 crore in FY22–24 have driven innovations like OTA updates and smart diagnostics.
• Premium Positioning: Higher ASP (₹1.59 lakh) and 5% better margins per vehicle than Ola Electric.
• Strategic Partnerships: Collaborations with Amara Raja for battery supply and Hero MotoCorp for distribution.

Weaknesses

• Profitability Concerns: Persistent losses (₹1,059.7 crore in FY24) and negative return on net worth (-194%).
• Smaller Scale: 11.4% market share and 1,09,577 units sold in FY24, far behind Ola’s 3,30,000 units.
• No Battery Manufacturing: Reliance on external suppliers, unlike Ola Electric, increases costs.
• Regional Challenges: Sluggish acceptance in North and East India, with a stronger presence in South India.

IPO Objectives and Risks

Ather plans to allocate IPO proceeds as follows:

• ₹927.2 crore: New E2W factory in Maharashtra with 500,000-unit capacity, starting May 2026.
• ₹750 crore: R&D for new models, including the Zenith motorcycle platform.
• ₹378.2 crore: Debt repayment to reduce financial leverage.
• ₹300 crore: Marketing and brand building.
• Remaining funds: General corporate purposes.

Key Risks:

• Competition: Intense rivalry from Ola Electric, TVS, Bajaj, and upcoming players like Honda and Suzuki.
• Profitability: High operational costs and R&D investments may delay breakeven.
• Battery Supply: Dependence on imported lithium-ion cells, with price volatility risks.
• Regulatory Changes: A Potential reduction in FAME subsidies could impact demand.
• Charging Infrastructure: Inadequate public chargers may hinder mass adoption.

Investor Sentiment and Market Outlook

Analysts are cautiously optimistic. Elara Securities noted Ather’s strong product quality and lower cash burn but flagged its slower market share growth (8–12% since FY20) and lack of Production-Linked Incentive (PLI) benefits. Moneycontrol emphasised Ather’s potential in a growing market but warned of its capital inefficiency compared to legacy players.

Strategic Outlook for Ather Energy

Ather’s long-term success hinges on several factors:

• Scaling Production: The new Maharashtra facility will boost capacity to meet rising demand.
• Product Diversification: Entry into the electric motorcycle segment with the Zenith platform could expand its addressable market.
• Charging Infrastructure: Expanding Ather Grid, especially on highways, will support inter-city travel.
• Localisation: Partnerships with Amara Raja reduce reliance on imported batteries, improving margins.
• Profitability: Achieving EBITDA breakeven requires monthly sales of 50,000 units, a challenging but attainable target with distribution expansion.

CEO Tarun Mehta remains bullish, citing India’s EV adoption story as “unchallenged” due to lower total cost of ownership and ease of driving. He predicts scooters will lead EV growth, with 40% of the two-wheeler market electrified by 2030.

Conclusion

Ather Energy’s IPO offers investors a chance to participate in India’s EV revolution, driven by a company with a strong brand, innovative products, and a robust charging network. However, its high losses, limited scale, and intense competition from Ola Electric, TVS Motor, Bajaj Auto, and Hero MotoCorp warrant caution. Compared to Ola, Ather has a lower cash burn and better per-vehicle margins but lags in market share and revenue. Against legacy players, Ather’s tech-driven approach is a differentiator, but their financial stability and scale are unmatched.

For long-term investors, Ather’s growth potential in a market projected to reach 10.2 million units by FY31 is compelling, supported by its R&D investments and upcoming manufacturing capacity. However, near-term profitability challenges and competitive pressures suggest a high-risk, high-reward proposition. Investors should consult financial advisors and review the Red Herring Prospectus (RHP) before subscribing, as emphasised by sources like Business Today and LiveMint.