Ather Energy IPO

Ather Energy claims to have introduced several firsts in the Indian E2W market. These include features such as touchscreen dashboards, internet-connected scooters via 3G SIM, and fast-charging infrastructure. The company also claims to be the first to offer features like traction control, Fall Safe, and a smart helmet (Halo).

The company claims that nearly half its workforce is dedicated to R&D, with 731 on-roll R&D employees as of December 31, 2024. It also reports substantial R&D expenditure, amounting to Rs 238.8 crore in the first nine months ended December 31, 2024, and a significant IP portfolio, including 45 registered patents and over 300 trademark filings.

The company has built a connected ecosystem through Atherstack, which it claims is used by 86 percent of its E2W customers. This platform supports features like Trip Planner and OTA updates, and reportedly delivered EBITDA margins above 50 percent.

The company claims it follows a capital-efficient model by outsourcing non-core manufacturing while retaining control over IP-sensitive components. It has also adopted an asset-light distribution strategy, leveraging retail partners for experience centres and service facilities, which it claims enables faster expansion and cost savings.

Ather Energy Limited claims its modular technology platform enables rapid product development, as demonstrated by the launch of the Ather Rizta in just 13 months. Common components, such as battery packs and chassis, are shared across models to reduce costs and development time, enabling the company to respond quickly to market needs.

Apart from battery packs, which Ather Energy manufactures in-house, the company depends on third-party suppliers for all other major E2W components, such as motors, controllers, transmissions, dashboards, and chassis. Any disruption, delay, or quality issues from these suppliers could significantly affect the company’s production and delivery timelines, with limited fallback options available.

Ather Energy has reported negative cash flows from operating activities amounting to Rs 228.4 crore in FY2022, Rs 871.3 crore in FY2023, Rs 267.6 crore in FY2024, and Rs 717.1 crore in the nine months ended December 31, 2024. After falling sharply in FY24 compared to FY23, it again shot up in the nine months to December 31, 2024. If cash outflows continue to exceed inflows, the company may face liquidity challenges in the future.

The company reported significant pre-tax losses of Rs 344.1 crore in FY2022, Rs 864.5 crore in FY2023, Rs 1,059.7 crore in FY2024, and Rs 577.9 crore in the nine months ended December 31, 2024. The sharp fall in the period ending December 31, 2024, is encouraging, but investors need to keep a lookout to see if it is sustained. Also, cash burn is a common feature in the pre-scaling stage of new-age companies. In this stage, the companies are typically focused on developing their products, building capabilities, establishing their brand and may also need to invest heavily in infrastructure and hiring employees. Eventually, the cash burn rate reduces as companies turn EBITDA positive and later positive at the net level. Tesla is a good example.

As of February 28, 2025, the company had outstanding financial indebtedness of Rs 533.6 crore. Any failure to service or repay these loans can harm the company’s operations and financial position.

Ather Energy relies on imports from China, Hong Kong SAR, Singapore, and South Korea for seven critical E2W components, including five battery-related components. Any restriction or trade barrier introduced by Indian authorities or foreign governments could disrupt the company’s supply chain and manufacturing schedule.

Ather Energy’s market share in the Indian E2W segment remained relatively stagnant at 10.7 per cent for the nine months ended December 31, 2024, and 11.5 per cent for FY2024. The company does not give any assurance that it will be able to maintain or expand its market position amidst heightened competition and evolving consumer demands.

Ather Energy derives a significant portion of its revenue from sales in South India, with approximately 61 per cent of its E2W sales during the nine months ended December 31, 2024, originating from this region. Any adverse developments in South India could disproportionately disrupt the company’s sales, negatively affecting its overall business performance, operating results, and financial condition.

The company is involved in litigation aggregating to Rs 116.20 crore, or 108 percent of its net worth, a portion of which is disclosed as contingent liabilities. If a significant portion of these liabilities materialises, it could hurt the company’s business and cash flows.

The company’s manufacturing of battery packs and assembly operations rely heavily on its two facilities near Hosur, Tamil Nadu. Any disruption due to regional unrest, labour shortages, natural disasters, or severe weather events could hurt the company’s ability to meet production and delivery timelines.