Ather Energy, a prominent Indian electric scooter manufacturer, experienced a challenging debut on the stock market, with its shares closing 8.3% below the listing price on May 6, 2025. Despite initial optimism, the stock’s performance reflects broader concerns in the electric vehicle (EV) sector and the current volatility of India’s IPO market.
Ather Energy’s IPO: A Brief Overview
- Issue Price: ₹321 per share
- Listing Price: ₹328 on NSE (2.18% premium)
- Closing Price: ₹302.30 on NSE (8.3% below listing price)
- Total IPO Size: ₹2,981 crore
- Subscription Rate: 1.43 times overall
- Market Capitalization at Listing: Approximately ₹12,144 crore
The IPO comprised a fresh issue of ₹2,626 crore and an offer-for-sale (OFS) of ₹354 crore by existing shareholders.Despite being the first mainboard IPO of FY26, the offering saw modest demand, particularly from non-institutional investors, whose portion was subscribed only 0.66 times.
Factors Influencing the Underwhelming Performance
1. Intense Competition in the EV Market
Ather Energy holds a 15% market share in India’s electric scooter segment, trailing behind competitors like TVS Motor and Bajaj Auto. The EV market’s rapid expansion has led to increased competition, making it challenging for companies to maintain profitability.
2. Financial Challenges
The company reported a pre-tax loss of ₹1,059.7 crore in FY24, a significant increase from ₹864.5 crore in FY23.Revenue remained stagnant at ₹1,753.8 crore in FY24, down from ₹1,780.9 crore in FY23. Analysts estimate that pure-play e-scooter companies like Ather incur losses of up to ₹30,000 per vehicle, projecting a three-year path to profitability.
3. Market Volatility and Investor Sentiment
India’s IPO market has seen a 58% decline in listings on main exchanges this year, with total fundraising dropping by 18%. Global economic uncertainties, including trade tensions and geopolitical issues, have led to cautious investor behavior.
Utilization of IPO Proceeds
Ather Energy plans to allocate the funds raised from the IPO as follows:
- ₹927.2 crore: Establishment of a new electric two-wheeler manufacturing plant in Maharashtra
- ₹750 crore: Investment in research and development (R&D)
- ₹300 crore: Marketing initiatives
- ₹40 crore: Debt repayment
These investments aim to enhance Ather’s production capacity and technological capabilities, positioning the company for future growth.
Conclusion
Ather Energy’s lackluster stock market debut underscores the challenges faced by EV startups in a competitive and volatile market. While the company’s technological innovations and expansion plans are promising, achieving profitability remains a significant hurdle. Investors are advised to monitor Ather’s financial performance and market developments closely before making investment decisions.
