Ather Energy IPO sees muted grey market buzz ahead of its listing

Ather Energy will debut on Indian stock exchanges on Tuesday, May 6, with a soft grey market premium hinting at a subdued start for the electric two-wheeler maker’s shares. As of Monday, May 5, the grey market premium stood at Rs 7, implying a marginal 2.18% upside over the IPO’s upper price band of Rs 321. Allotments were finalised on Friday, with shares credited to investor accounts and refunds issued on Monday.

The Rs 2,626 crore IPO, which was open from April 28 to April 30, drew a relatively subdued response across categories. Retail investors subscribed 1.78 times their allocated portion, followed by qualified institutional buyers at 1.70 times. Non-institutional investors lagged at 66% subscription, while the employee quota saw robust demand at 5.43 times.

The company allocated at least 75% of the offering to QIBs, up to 15% for NIIs, and no more than 10% for retail. A block of 100,000 shares was reserved for employees at a Rs 30 discount per share. The IPO was priced between Rs 304 and Rs 321 per share, with a face value of Re 1.

Grey market premium fades

Once seen trading at a premium of Rs 17, Ather Energy’s unlisted shares have steadily lost steam in the grey market. The GMP fell to Rs 3 last Monday and touched Rs 1 by Tuesday before inching up to Rs 7 on Monday, according to data from investorgain.com. On the final day of bidding last week, the premium was just Rs 1—offering little cushion for listing-day gains.

Use of proceeds

Ather intends to use Rs 927.2 crore from the IPO proceeds to set up a new manufacturing plant in Maharashtra. Additionally, Rs 750 crore is earmarked for R&D, Rs 300 crore for marketing, and Rs 40 crore for debt repayment, spread over FY26 to FY28.The offering included a fresh issue and an offer-for-sale of 1.1 crore shares by promoters and early backers such as National Investment and Infrastructure Fund II, Internet Fund III Pte. Ltd., and IIT Madras-linked entities. Founders Tarun Sanjay Mehta and Swapnil Babanlal Jain also offloaded shares.

Analyst views mixed

Analysts expressed differing views on valuation. Geojit Investments cited a steep EV/Sales ratio of 7.1x (FY24) and recommended subscribing only for high-risk, long-term investors. Arihant Capital, valuing the issue at 8x based on 9MFY25 sales, issued a ‘Subscribe for listing gain’ call.

Known for its premium electric two-wheelers and in-house R&D, Ather recently launched its family scooter model, the Ather Rizta. Early institutional backer IIT Madras, which holds 15.58 lakh shares, is expected to net around Rs 50 crore from the IPO.

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