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Ather Energy Makes Stock Market Debut
Electric two-wheeler manufacturer Ather Energy has made its stock market debut on Tuesday, opening at Rs 328 per share, reflecting a 2.2% increase over its IPO price.
As trading commenced, the Sensex saw a decline of 240 points, settling at 80,557, while the Nifty50 dropped by 78.6 points to 24,382.
On May 5, Ather Energy’s shares were observed trading at a premium of Rs 7 in the grey market, translating to a 2.18% gain over the IPO’s upper price band of Rs 321.
Ather’s IPO, which amounted to Rs 2,626 crore, was open from April 28 to April 30 and received a tepid response from investors. By the end of the subscription period on April 30, the Qualified Institutional Buyers (QIB) portion was subscribed just 1.7 times, whereas Non-Institutional Investors (NIIs) only filled 66% of their allotted quota. Retail investors, who typically drive IPO momentum, showed relatively more interest with a subscription rate of 1.78 times.
According to the Draft Red Herring Prospectus (DRHP), Tiger Global has achieved an impressive 8.3X return from the partial shares sold in the offer for sale (OFS), while Caladium Investment and National Investment and Infrastructure reported returns of 57% and 75%, respectively.
In the first nine months of FY25, Ather Energy sold 1,08,000 vehicles, resulting in revenue of Rs 1,578.9 crore. However, the company posted a loss of Rs 579.6 crore during this period. For the fiscal year ending March 2024, Ather reported revenue of Rs 1,753 crore with an overall loss of Rs 1,062 crore.
As of 10:18 AM today, Ather Energy shares were priced at Rs 326.05, marking a total market capitalization of Rs 12,144 crore or $1.48 billion.
The modest premium on the first trading day indicates that Ather shareholders may encounter a challenging path ahead, given that the issue was adequately priced despite a valuation adjustment. It is apparent that there may not be any significant upward surprises from Ather in the forthcoming quarters, as the firm aims to avoid hasty decisions. This represents a true long-term investment, where steady improvements in the firm’s fundamentals are expected thanks to its extensive commitment to research and development and reputation building.
The stock price is likely to test the patience of investors, particularly if market fluctuations occur due to external factors like Trump. A decline below the issue price, similar to the situation with Ola Electric, would not be unexpected, although it is hoped that investors have taken lessons from the challenges faced by Ola.
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