Muted debut, rich valuations: Can Ather Energy override early bumps to deliver long-term gains?

Time of India

06-05-2025

Founded in 2013, Ather Energy has built a niche for itself in the premium electric two-wheeler (E2W) segment. Its four-model lineup, hybrid sales model, and 3,000+ fast chargers across 230 cities differentiate it from peers like Ola Electric.
Ather Energy's stock debuted flat and continued to decline due to subdued IPO response and stretched valuations. Despite investor caution, analysts see long-term potential in Ather's brand, EV ecosystem, and expansion plans. Profitability may take time due to competition and costs, making it suitable for high-risk investors willing to accumulate gradually.
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What should investors do?
Will Ather revive the IPO market?
As expected, Ather Energy shares made a flattish debut and the selling pressure continued even after the listing. The tepid start for the company was due to a variety of reasons including subdued investor response for the IPO, stretched valuations and overall muted secondary market sentiments. Currently, the stock is trading 5% below the issue price at Rs 309 apiece on NSE.While investor appetite was lukewarm -- the IPO was subscribed just 1.04 times -- analysts believe the stock's long-term story remains intact, backed by strong brand recall, a differentiated EV ecosystem, and capacity expansion plans. However, they caution that the path to profitability may take time given rising competition and high operational costs.Founded in 2013, Ather Energy has built a niche for itself in the premium electric two-wheeler (E2W) segment. Its four-model lineup, hybrid sales model, and 3,000+ fast chargers across 230 cities differentiate it from peers like Ola Electric According to Ventura Securities, Ather's strength lies in its vertically integrated model and in-house tech stack like 'AtherStack'—which 86% of users subscribe to -- offering strong recurring revenue with 50% plus margins.Yet, financials are under stress. The company's FY24 loss widened to Rs 1,059 crore despite Rs 1,754 crore revenue, owing to high R&D spend (15% of revenue), elevated raw material costs, and limited scale economies. EBITDA margins remained negative at –39%.Mehta Equities points out that Ather's EV/sales multiple of 6.2x is expensive versus Ola Electric's 3.5x, making valuations rich amid high cash burn.'While comparisons with Ola Electric are inevitable, Ather stands out with a more premium brand image, superior margins per vehicle, and lower cash burn. That said, it currently commands only about one-third of Ola's market share. Similar to Ola's IPO, a post-listing rally remains possible if momentum builds after debut,' said Gaurav Garg of Lemonn Market Desk.With revenue growth slowing and losses deepening, analysts say Ather's post-listing trajectory will depend heavily on cost control, dealer expansion beyond South India, and updates on subsidy dependency. For now, most brokerages suggest that only high-risk investors should accumulate the stock gradually on dips.In the near term, listing volatility may continue. However, if execution picks up and margins stabilize, the long-term EV opportunity still favors players like Ather with strong tech, brand loyalty, and a premium urban appeal.Ather IPO did not receive the kind of overwhelming response that the market was anticipating. Analysts said this suggests that it may still be too early to call a full-fledged revival of the IPO market."The broader revival will heavily depend on the continued stability and strength of the secondary markets, which are just beginning to show signs of recovery," said Arpit Jain, Joint MD, Arihant Capital Markets (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)