Ather Energy IPO Day 2: Subscription at 26%, Investors Stay Cautious — Here's Why

The initial public offering (IPO) of Ather Energy received a weak response from investors on Day 2. As of 2:30 pm, the issue was subscribed by 0.26 times, in which retail investors booked the shares by 1.09 times, however, Qualified Institutional Buyers (QIB) didn’t show any interest. Meanwhile, Non-Institutional Investors (NIIs) subscribed by 0.2 times.

The company plans to raise ₹2,981 crore. The IPO is a combination of fresh issue and an offer for sale (OFS) equalling 8.18 crore and 1.1 crore equity shares. The price band has been fixed in the range of ₹304-321.

What are the concerns expressed by the brokerages?

Overvalued issue

As per Deven Choksey Research, the IPO is offered at a EV/Sales valuation of 6x. They said, “appears overvalued. We assign ‘Avoid’ rating and believe that it can be bought at attractive valuation in the secondary market.”

Supply chain woes

Ather Energy is dependent on Chinese imports for its EV components. Additionally, disruption in the supply, pricing of lithium-ion cells is seen as a major risk.

Competition fears

Heightened competition from electric two-wheeler companies could play spoilsport in Ather’s growth.