Anchor Investment Underlines Ather Energy's Valuation Premium Over Ola Electric

Electric two-wheeler manufacturer Ather Energy has finalized its anchor investor allocation at ₹321 per share, valuing the company at $1.4 billion (₹11,956 crore) post IPO, or Rs 9,330 crore pre IPO. This also means that investors value Ather Energy at a premium, compared to bigger rival Ola Electric.

Bengaluru-based Ather Energy allocated 4.17 crore equity shares to anchor investors, including prominent domestic funds like SBI Small Cap Fund and Aditya Birla Sun Life, raising ₹1,340 crore in the anchor round.

Based on the anchor investment price of ₹321 per share and Ather Energy's pre-issue outstanding share count of 29.064 crore shares, the company's pre-money valuation stands at ₹9,329.54 crore. However, after accounting for the planned fresh issuance of equity (Rs 2,626 crore in the whole of the IPO), the post-money valuation reaches the $1.4 billion mark.

Premium Valuation

The share price of Rs 321 also values Ather at 55% of rival Ola Electric's market capitalization, on a day when Ola's shares fell below the psychologically important level of Rs 50 for the first time ever to ₹49.72.

This valuation is particularly significant when one compares the relative size of Ola Electric and Ather Energy. In volume terms, Ola is three times as big as Ather Energy, and has a 30% share of the electric two-wheeler market.

However, its valuation is not even 2x that of Ather's latest discovered share price, going by the anchor investment round. Typically, the No.1 player in any market should also get a 'size premium' in its valuation, as it has greater heft and market share, and therefore, greater competitive advantage and a bigger shot at success. However, in this case, Ola Electric's valuation has not quite reached up to that point.

Ather's Valuation Numbers

Ather, meanwhile, plans to raise ₹2,626 crore through the fresh issuance of equity in its IPO, which translates to approximately 8.181 crore new shares at the anchor price of ₹321 per share. Adding these new shares to the pre-issue outstanding shares brings the total post-IPO share count to 37.245 crore shares.

At the established price of ₹321 per share, Ather Energy's post-money valuation comes to approximately ₹11,955.65 crore ($1.4 billion at current exchange rates of ₹85.37 per US dollar), positioning it as the second electric two-wheeler startup to enter the public markets after Ola Electric.

The IPO proceeds will primarily fund the establishment of a new manufacturing facility in Maharashtra and repay selected borrowings, strengthening the company's position as it competes in India's growing EV market.

Ather Energy currently holds the fourth position in India's electric two-wheeler market with 11% market share in FY25, trailing behind market leader Ola Electric, TVS Motor Company, and Bajaj Auto. The company recorded sales of 130,737 units in the last fiscal year, up from 108,936 units in the previous year.

Hero MotoCorp, which holds a 37.3% stake in Ather Energy on a pre-money basis, is expected to see significant value unlocking from the IPO. Market observers suggest this could enhance Hero's sum-of-the-parts valuation by approximately ₹250-275 per share.