Chillax, Folks! Hold Up on Ather Energy's Listing on May 6 – Here's Why!
Investors Shy Away from Ather Energy IPO: Five Key Factors Deterring Participation
Vibeify Keep It Pocket-Friendly Ather Energy IPO – With just a day left before Ather Energy's listing, many investors are playing it cool instead of jumping in. Why? Let's dive in to the juicy deets!
Ather Energy IPO: 5 Reasons Why Investors Aren't Diving In
So, you thought Ather Energy's IPO was gonna be a smash hit? Not so fast, partner! Experts have weighed in and found the following five reasons why investors are hesitating:
1. Valuation Blues: According to Deven Choksey Research, we should steer clear of this issue due to its valuation concerns. Ather Energy is valued at a whopping 6x EV/Sales – that's way pricier than other players in the scene, like Bajaj Auto (5.4x), TVS Motor (3.5x), and Hero MotoCorp (2.7x) [3]. Some believe the stock might be more affordably priced in the secondary market after the listing.
2. The Struggle to Turn a Profit: A deeper look at Ather Energy's financial reports shows they've been swimming in the red for the past three years starting from FY22 [3]. Even their 9-month FY25 numbers filed in the DRHP show a massive loss of Rs 577.9 crore. The potential path to profitability is challenging, worrying analysts.
3. Burning Cash: Another red flag is Ather Energy's negative cash flow. According to the DRHP, the company reported a negative cash flow of Rs -228.4 crore in FY22, Rs -871.3 crore in FY23, Rs -267.6 crore in FY24, and Rs -717.1 crore in 9M FY25 [4]. This could impact the company's liquidity.
4. Keeping Up with the competition: Despite being one of the early players in the electric two-wheeler market, Ather Energy's market share isn't going like gangbusters. Compared to the 11.5% share in FY24, the 9-month share for FY25 looks like it'll only inch forward to about the same levels as FY24. With more players hopping on the bandwagon, their market share could slip faster [4].
- The Government is Calling the Shots: Ather Energy's dependency on government incentives like the PM e-drive program is a major concern for investors [4]. There's also the worry that the withdrawing of incentives could affect retail pricing.
Small Investors Eating Up Ather Energy's Shares: What You Need to KnowGiven these reasons, investors are taking a more calculated approach – eyes are on Ather Energy's listing on May 6 and whether it'll list closer to the issue price of Rs 320 per share.
Ather Energy, IPO, Electric Two-Wheeler, Nifty 50, BSE Sensex, Stock Market Stats, Share Market News, Our Website App, Business News
[1] Investors Cool on Ather Energy, Driving Down GMP Before IPO – CNBC TV18[2] Why Ather Energy’s IPO Might Not Be a Home Run – Mint[3] Deven Choksey Research: Ather Energy IPO Rating and Valuation – Money Control[4] Brokerage Houses Mixed on Ather Energy IPO – Economic Times[5] Electric Vehicle Market in India 2022 – Industry Survey – P&S Intelligence[6] Analysis of Ather Energy Q3 2022 Earnings Report – CNBC TV18[7] Ola Electric Scooter: Analysis and Performance After IPO – Zee Business[8] Hero MotoCorp to Launch Electric Two-Wheeler Models – Business Standard
- Despite the upcoming Ather Energy IPO, some investors are exhibiting a tepid response, primarily due to valuation concerns and profitability issues.
- Ather Energy's valuation of 6x EV/Sales, compared to competitors like Bajaj Auto, TVS Motor, and Hero MotoCorp, has left investors questioning the stock's affordability.
- Analysts are concerned about Ather Energy's consistent three-year loss, with a significant Rs 577.9 crore loss reported in the 9-month FY25 financial reports.
- Ather Energy's negative cash flow, estimated at Rs -717.1 crore in 9M FY25, raises liquidity concerns for the company.
- As more players enter the electric two-wheeler market, maintaining market share could prove challenging for Ather Energy.
- Investors are closely watching Ather Energy's May 6 listing, hoping for a price closer to the issue price of Rs 320 per share, as they weigh the potential risks and rewards of this investment in 2025.
