Ather Energy, a leading Indian electric two-wheeler (E2W) manufacturer, witnessed a robust recovery in its share price, climbing nearly 8% on Wednesday, May 7, 2025, just a day after a lackluster stock market debut. This article delves into the factors driving this surge, the company’s IPO performance, and its strategic plans, offering insights for investors and EV enthusiasts alike.
Ather Energy’s Share Price Rally
On Wednesday, Ather Energy’s shares surged 7.9% to ₹326.2 apiece on the National Stock Exchange (NSE) by 12:14 pm, boosting the company’s market valuation to ₹12,149.63 crore. This rebound followed a modest debut on Tuesday, May 6, when the stock listed at ₹328 on the NSE, a 2.18% premium over its issue price of ₹321, and at ₹326.05 on the BSE, up 1.57%. The sharp uptick reflects growing investor confidence in Ather’s long-term potential in India’s burgeoning electric vehicle (EV) market.
The rally comes despite a volatile first trading day, where the stock slipped 8.54% to close at ₹300 on the NSE, signaling initial investor caution. Posts on X highlighted the stock’s recovery, with some noting a 5–6% intraday surge, underscoring positive market sentiment.
Ather Energy IPO: Key Highlights
Ather Energy’s ₹2,981-crore IPO, the first mainboard public issue of FY26, was subscribed 1.43 times during its three-day bidding period from April 28 to April 30, 2025. The offering comprised a fresh issue of ₹2,626 crore and an offer-for-sale (OFS) of over 1 crore equity shares by promoters Tarun Sanjay Mehta, Swapnil Babanlal Jain, and other shareholders.
-
Subscription Details: The IPO saw strong demand from qualified institutional buyers (QIBs, 1.70x) and retail investors (1.78x), with the employee quota oversubscribed 5.43 times. However, non-institutional investors (NIIs) showed weaker interest, subscribing to 66% of their allocation.
-
Fund Utilization: Proceeds from the fresh issue will fund a new electric two-wheeler factory in Maharashtra (₹927.2 crore), research and development (₹750 crore), debt repayment (₹40 crore), marketing, and general corporate purposes.
-
Comparison to Peers: Ather is the second E2W company to go public after Ola Electric Mobility’s ₹6,145-crore IPO in August 2024. Unlike Ola, which debuted flat or at a discount, Ather’s listing premium, though modest, was better received.
Financial Performance and Challenges
Ather Energy’s financials reflect both its growth trajectory and the challenges of operating in a competitive, capital-intensive sector:
-
Revenue: In FY24, Ather’s revenue from operations declined 3.2% to ₹1,913.5 crore from ₹1,976.8 crore in FY23, primarily due to market dynamics and pricing pressures.
-
Net Loss: The company reported a net loss of ₹1,059.7 crore in FY24, up from ₹864.5 crore in FY23, driven by high R&D and marketing expenses. However, a 107.1% revenue CAGR from FY22 to FY24 highlights Ather’s strong growth potential.
-
Market Position: With an 11.5% market share in FY24, Ather ranks as India’s fourth-largest E2W manufacturer by sales volume, trailing Ola Electric (49% market share). Its premium brand image and focus on innovation differentiate it from competitors like Hero MotoCorp, Bajaj Auto, and TVS Motor.
Despite losses, Ather’s CEO, Tarun Mehta, expressed optimism about FY26, projecting improved volume growth, margins, and market share. He also noted that EBITDA breakeven and cash flow positivity are on the horizon, driven by the launch of the Ather Rizta scooter and expanded production capacity.
Why the Share Price Surged
Several factors contributed to Ather Energy’s share price rally on May 7:
-
Investor Optimism: The 8% surge reflects renewed confidence in Ather’s growth story, particularly its plans to scale manufacturing and invest in R&D. The Maharashtra factory, with a capacity of 420,000 vehicles annually, positions Ather to meet rising EV demand.
-
Sector Tailwinds: India’s E2W market, the world’s largest for two-wheelers, recorded 18.4 million units in domestic sales in FY24. Government incentives and increasing fuel costs are driving EV adoption, benefiting players like Ather.
-
Premium Positioning: Ather’s focus on premium scooters like the Ather 450 and Rizta, coupled with its ecosystem of charging infrastructure and smart accessories, sets it apart from competitors. Analysts note its superior margins per vehicle compared to Ola Electric.
-
Post-Listing Sentiment: Despite a weak debut, bargain-hunting by investors and positive media coverage, including posts on X, fueled the recovery.
Risks and Considerations for Investors
While the share price rally is encouraging, investors should remain mindful of risks:
-
Competitive Landscape: Ather faces intense competition from established players like Hero MotoCorp and Bajaj Auto, as well as Ola Electric, which commands a larger market share.
-
Profitability Concerns: Persistent losses and reliance on imported components, particularly lithium-ion cells from China, pose operational risks. Regulatory changes or supply chain disruptions could impact costs.
-
Valuation: Analysts like Prashanth Tapse of Mehta Equities argue that Ather’s IPO was aggressively priced compared to Ola Electric, suggesting limited near-term upside unless financials improve.
-
Market Volatility: The E2W sector is capital-intensive, and short-term price swings are likely, as noted in posts on X warning of high volatility.
Outlook for Ather Energy
Ather Energy’s share price surge signals market optimism about its role in India’s EV revolution. The company’s investments in manufacturing, R&D, and brand-building, supported by a ₹2,626-crore fresh issue, position it for long-term growth. However, achieving profitability and scaling market share in a crowded market will be critical.
Analysts recommend a “Hold” for risk-tolerant investors, citing short- to medium-term volatility but acknowledging Ather’s potential for value-conscious buyers if valuations stabilize. For updates, investors can track Ather’s Q4 and FY25 results, set to be announced on May 12, 2025, as shared in posts on X.
Conclusion
Ather Energy’s 8% share price rally on May 7, 2025, marks a strong recovery from its muted IPO debut, driven by investor confidence in its growth plans and India’s EV market potential. While challenges like competition and losses persist, Ather’s premium branding and strategic investments make it a compelling player in the E2W space. Investors should weigh the risks and monitor financial updates to make informed decisions.
