Ather Energy reaffirms confidence in India's EV and consumer market strength ahead of its IPO, citing robust demand and policy momentum.
India consumer and EV story remains unchallenged even amid the ongoing tariff war, electric two wheeler maker Ather Energy said on Wednesday as it fixed a price band of Rs 304 to Rs 321 apiece for its Rs 2,981-crore IPO that is set to be opened for public subscription from April 28 to April 30.
Of this, the offer for sale portion comprises nearly Rs 355-crore, the company said.
Ather Energy also said it remains bullish on its scooter portfolios in the coming few years and that distribution expansion will drive a lot of growth in the near-term for the company.
"While the entire tariff situation is open, in our opinion, the India consumer story, specifically the Indian EV adoption story remains, unchallenged because that's driven by very secular truths, (whether) US tariffs on or off, they have very limited impact on it," Ather Energy Co-founder and CEO, Tarun Mehta said.
He said that the domestic EV industry is largely driven by factors such as the total cost of ownership of an electric vehicle; especially an electric scooter, which is substantially lower compared to a petrol scooter, driving style and the ease of driving of an electric vehicle among others.
"And hence, our assessment of our industry's overall growth coming by replacing petrol vehicles remains frankly unchanged," he said.
Mehta also said that even on the supply chain side, the EV industry is not exporting a lot to the US and similar markets, adding that "the focus, even as our industry looks at exporting, will be on other markets. The reliance on imports, according to him, has consistently been coming down.
Even for the lithium-ion cell, which is largely imported, a number of players and a number of production suppliers are announcing strategic investment and outlays for producing these cells in the country, Mehta said while sounding bullish that the cell production will continue to shift to India in the coming years.
Ather believes in long-term thinking and is always focused on the long term whether it is brand building, quality, governance or debt management, and that is something the market likes and wants, he said.
He said that it makes sense to hit the capital market when the growth outlook is strong.
He said that so far the brand Ather 450 scooter has driven growth for the company but what's starting to drive a lot of our growth is the new product Rizta, adding that the future growth will be driven by distribution expansion on the back of this model.
"Rizta has opened up a lot of new markets for us in India, especially in the markets where performance scooters Ather 450 don't even sell. Hence these geographies were closed to us but have now opened up because of Rizta. So that gives us a lot of comfort and confidence," Mehta stated.
"So distribution expansion is going to drive a lot of near-term growth. And in the mid-to-long term, it's product expansion," he said.
He also said that the company is building a second platform, EL platform for potentially multiple scooter products and another one Zenith platform for multiple bike products.
"EL is focused on scooters and it's meant to enable more cost efficient architectures while Zenith is focused on motorcycles aimed at products in the 125 -300 cc category," he said.
Ather intends to raise funds to set up an electric two-wheeler factory in Maharashtra and for debt reduction. At the upper end of the price band, the IPO size is pegged at Rs 2,981 crore, placing the company's overall valuation at Rs 11,956 crore. This will be the second electric two-wheeler company looking to go public after Ola Electric Mobility floated its Rs 6,145 crore IPO in August last year.
Ola Electric's IPO had a fresh issue of up to Rs 5,500 crore and an OFS of up to 8.5 crore equity shares.
The electric two-wheeler company has set aside 75 per cent of the issue for qualified institutional buyers, 15 per cent for non-institutional investors and the remaining 10 per cent for retail investors.
The company had earlier planned to raise Rs 3,100 crore through IPO.
Justifying the reduced IPO size, Mehta said the secondary component of the IPO – the company's existing shareholders who are selling-- has been cut by 50 per cent as they have decided to sell less than they were selling in the past, which is their preference.
"But the primary component has only been cut by 12 per cent and that too on the debt repayment side as the recent quarters' performance gives us a lot of confidence around internal accruals supporting debt repayment in the coming years, which is why only debt repayment has been pared down by about 12 per cent." But all the other growth levers--R&D, Capex and marketing have been left intact, he added.
Apart from its IPO plans, Ather Energy has also been expanding its research and development capabilities. Recently, the company announced the expansion of its R&D and testing capabilities at its product testing & validation centre.
Axis Capital, JM Financial, Nomura Financial Advisory and Securities (India), and HSBC Securities & Capital Markets are the IPO's book-running lead managers. The equity shares of the company are expected to list on the stock exchanges on May 6.