After Ola, Ather Gears Up for ₹3,000 Crore IPO Amid Intensifying Competition from Bajaj and TVS in India’s EV Scooter Market

Bengaluru-based electric two-wheeler manufacturer Ather Energy is gearing up to raise ₹2,981 crore through an initial public offering (IPO) slated for April 28, aiming for a valuation of ₹12,000 crore. Backed by Hero MotoCorp, this IPO marks a significant moment in India’s electric mobility landscape, coming nearly a year after Ola Electric’s public issue in August 2024 and ending a nine-week dry spell in India’s primary equity market.

Ather’s IPO comes as India’s electric two-wheeler (E2W) market undergoes rapid consolidation, with legacy giants like Bajaj Auto, TVS Motor, and Hero MotoCorp increasingly capturing market share. While Ola's market share declined from 34% to 30% in FY25, Ather maintained a steady 11.6%, positioning itself as the fourth-largest player, particularly strong in South India.

The IPO proceeds are earmarked for strategic expansion. Ather will invest ₹927 crore in a new manufacturing facility in Maharashtra, ₹750 crore in R&D, and ₹300 crore in marketing. This new facility in Chhatrapati Sambhaji Nagar, along with its existing Hosur plant, is expected to nearly triple the company’s production capacity. While the Maharashtra unit will support expansion in the northern and western regions, current utilisation of the Hosur facility remains modest at 40%.

Ather’s R&D efforts are central to its long-term strategy. With over 700 employees working across various technological domains, the company spent 13% of its FY24 revenue on R&D. Key focus areas include the development of an electric motorcycle platform, an underexplored segment Ather considers ripe for innovation. Additionally, the company is working on next-gen technologies in powertrain systems, battery chemistry, and magnet-free motor solutions to enhance performance and cut production costs.

In particular, Ather is evaluating a new battery platform based on lithium iron phosphate (LFP), which is less reliant on scarce minerals and offers potential cost advantages over the current nickel manganese cobalt (NMC) chemistry. Ather is also exploring motor technologies that eliminate dependence on rare-earth metals, aiming to reduce supply chain risks associated with geopolitical tensions.

Despite Ola’s decision to vertically integrate its supply chain by building in-house lithium-ion cell manufacturing, Ather has opted to continue sourcing cells from China and South Korea, while assembling battery packs in-house and outsourcing most other components. Nevertheless, Ather claims significant local value addition, which is crucial for qualifying under the Electric Mobility Promotion Scheme (EMPS). In FY24, subsidies accounted for 16% of its operating revenue.

The Red Herring Prospectus (RHP) warns that any reduction or removal of government subsidies could impact Ather’s price competitiveness, particularly against internal combustion engine (ICE) vehicles. Ather’s IPO includes a fresh issue of 8.18 crore shares (₹2,626 crore) and an offer-for-sale component of 1.11 crore shares (₹354.76 crore).

In the first nine months of FY25, Ather reported ₹1,579 crore in operating revenue, a 28% year-on-year increase, while losses narrowed 25% to ₹578 crore. With its IPO, Ather not only seeks to expand but also brace itself for a market where competition from entrenched legacy players is intensifying. The success of this IPO may also shape the trajectory of Greaves Electric Mobility, which has filed for its own public listing.