Ather Energy Maps Path to Profitability Ahead of IPO with Battery Transition and Margin Improvements

Ather Energy Maps Path to Profitability Ahead of IPO with Battery Transition and Margin Improvements

Ather Energy is set to open its public offering for subscription on Monday, becoming the second electric vehicle (EV) manufacturer after Ola Electric to hit the public markets.

In a press conference on Saturday, Ather Energy’s Co-founder and CEO, Tarun Mehta, shared the company’s strategy to strengthen its EBITDA margins through increasing volumes, largely driven by the success of the new Ather Rizta model. Launched in May 2024, the Ather Rizta has made a significant contribution to the company's sales growth and overall volumes.

Mehta highlighted the company’s improved financial performance, noting that Ather's adjusted gross margin surged from 9% in the six months ending December 31, 2023, to 19% in the same period of 2024. Furthermore, the company managed to reduce its EBITDA loss margin from 34% to 23% over the same timeframe.

Backed by Hero MotoCorp, Ather Energy is witnessing better unit economics, thanks to rising volumes and an expanding product lineup. As a result, the company managed to cut its losses to Rs 577.9 crore for the nine months ending December 31, 2024, compared to Rs 776.4 crore in the prior year.

In addition to scaling volumes, Ather is making strategic moves on the cost front. The company is transitioning from the traditionally more expensive NMC (Nickel Manganese Cobalt) batteries to more affordable LFP (Lithium Iron Phosphate) batteries. It is also shifting to a lower-cost EL platform for its scooters, both of which are expected to further bolster margins.

The EV-maker will offer its shares in a price band of Rs 304 to Rs 321 per equity share during the IPO, opening on April 28. The offering comprises a fresh issue worth Rs 2,626 crore along with an offer for sale (OFS) of up to 1.1 crore shares. At the higher end of the price band, the OFS is estimated to be worth approximately Rs 354.76 crore. Ather Energy's valuation is pegged between Rs 11,322 crore and Rs 11,956 crore depending on the final pricing.

Ahead of the IPO, the Tiger Global-backed company raised Rs 1,340 crore from anchor investors, signaling strong market interest.

As Ather Energy gears up for its listing, the company’s focus on improving margins, optimizing battery technology, and expanding its product lineup seems to position it well on its journey to profitability and long-term growth.