Ather Energy's initial public offering (IPO) significantly underperformed expectations, raising approximately â‚ą3,000 crore ($355.8 million) with a subscription rate of only 1.4X. This contrasts sharply with Ola Electric's IPO last August, which was subscribed 4.5X.
Ather Energy's success stems from its focus on premium, made-in-India electric two-wheelers, characterized by homegrown designs and in-house R&D. Ola Electric, on the other hand, produces cheaper, mass-market vehicles and has heavily invested in in-house manufacturing, including cell production, which is considered a risk given the rapid evolution of cell technology. Ather's asset-light model, outsourcing service centers, differs greatly from Ola's approach.
The lukewarm response to Ather's IPO is attributed to several factors:
Analysts suggest that the timing of Ather's IPO might be a contributing factor to its underperformance.
“How far would you fly if your reference point is Ola Electric?”
This question—posed by a general partner at a venture-capital firm that’s invested heavily in electric vehicle (EV) startups—plagued Ather Energy’s IPO. And after the electric two-wheeler maker’s listing on 6 May, the answer seems not far at all.
Forget flying, Ather’s nearly Rs 3,000 crore ($355.8 million) initial public offering (IPO) has plodded along, on low gear to boot. It was subscribed just 1.4X—1.7X by qualified institutional buyers (QIBs), 1.8X by retail investors, while non-institutional investors managed just 0.7X.
The blame, as the partner hinted, lies partly with Ola and partly on extenuating circumstances. The company’s own IPO last August started off strong, subscribed 4.5X. But since then, one outrageous setback after another has pummeled the Ola stock. It’s now trading at two third its listing price.
Now, the two companies, though in the same industry, are a study in contrasts. Since it was founded in 2013, Ather has positioned itself as the country’s first “made-in-India” premium electric two-wheeler brand. It’s distinguished itself with its homegrown designs and in-house research and development—all contributing to great product quality.
Ola Electric, on the other hand, produces cheaper, mass-market vehicles, and has invested heavilyInc42Ather Energy Vs Ola Electric: A Battle Of Business Models And Positioning in in-house manufacturing, including that of cells. Not the smartest decision, given that cell technology is continuously evolving. And quite a contrast to Ather’s asset-light approach. Ola also owns all its experience and service centres, even as Ather has outsourced these to third-party retail partners.
“[But] that’s not enough to impress retail investors, especially after they’ve burned their hands once [with Ola],” said Umesh Chandra Paliwal, co-founder of Unlistedzone, a marketplace for unlisted shares.
This, coupled with EV ride-hailing startup Blusmart’s promoters siphoning offFinancial ExpressBluSmart drivers protest unpaid dues, demand justice Rs 400 crore of public money, has understandably dampened investors’ enthusiasm for the EV sector. Then there’s the US President Donald Trump’s tariff madness, amid which China has tightened rare-earth material exports—critical for cell manufacturing.
Combine it all, and one can’t help thinking Ather’s IPO timing is just “unlucky”, said Chandrachoodamani NV, equity analyst at research platform PrimeInvestor.
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