Daybreak - Ather’s IPO is a plot twist. Not a finale

Episode Date: May 1, 2025

Ather Electric once pioneered the electric two wheeler segment. But now it has fallen behind its competition like Ola Electric and TVS Motor in terms of market share. To make matters worse, its recent IPO saw a lukewarm response from investors. One thing is clear -- up until now, Ather’s focus has been on building superior products, loaded with features and a smooth user experience. But to take things to the next level, Ather will have to build a more compelling narrative. How did it get here? What's next for the EV maker? Tune in. Daybreak is looking for a talented audio journalist with at least two years of experience. Check out the role here. Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Ramon Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the same. secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they managed to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into.

to the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production. Sita and I are still reeling from the intensity of our first studio recording. Intermission launches on March 23rd. To get an alert, as soon as we release our first episode, please follow Intermission on Spotify and Apple Podcast. or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode.

Okay, it is such an exciting day to record together because this is the last day of Aether Energy, the EV company's IPO. There's just so much unfolding that is worthy of your attention and actually this has been all we could talk about in the newsroom all day. Yeah, that's so true. So, you know, we thought we'd switch things up a little bit on the episode today. And Rahel and I are going to be your ears on the ground.

And we will tell you all the latest buzz about Ather. Now, before we start, just some basic information. Athel wanted to raise close to 3,000 crore rupees through this public offering. And this included a fresh issue of more than 8 crore shares and an offer of sale for around 1 crore shares. The company has fixed the IPA. your price at 304 to 321 rupees per equity share. Right. And if you could take a moment to talk about the response to the IPO so far.

I'm reading from news reports here. And you know, you're seeing words like tepid, lukewarm. Yes, it's seen a lot of interest from retail investors. But it does seem like institutional investors are staying away from this particular IPO. Now, Stikta, there are a bunch of factors, right? But at the end of the day, all of them boil down to two main things. Timing and market sentiment. Absolutely.

Also, I think it's important, you know, to understand that, okay, this IPO has not lit up the market. Like many were expecting, as of now, 30th of April, Wednesday, we're recording in the evening. Just 35% subscription. This is day three, final day of the IPO. But it's important to note that it is not a move. that's been made out of desperation. You know, it's actually a very strategic move on part of Ather. They are playing the long-term game.

They're not looking for short-term success. And actually, you know, this is what Ather founders have been best known for. But now, of course, there will be increased, you know, accountability and transparency. You know, what you just said kind of reminded me of this episode that our colleagues, Rohan and Praveen, did over on the two-by-two podcasts. Oh, yeah, I remember. Yeah, they had the Aether founder Tarun Mehta on the show And he had a very interesting take on his company's approach to innovation

You buy an Ather, you get? You get magical experiences. Like Aether will do something in everything that they will do, which is, one thing to magical will be. Right. That sounds like a very fun take on the whole thing. But, you know, good intentions aside, Rahel, with the way things are right now,

Surviving in the EV market is going to be as much about, you know, control and credibility as it is going to be about innovation. So, why don't we just dive in? Hello and welcome to Daybreak. I'm Snigda. And I'm Rahil. And for a change today, we are chasing the news cycle to tell you all you need to know about the Aether IPO. Okay, we have to start by talking about the origin story of this incredible company that is Aether. right? We have to talk about the evolution of Aether

because yesterday it is India's fourth biggest electric scooter brand but back in the day they were actually one of the earliest players in the game they were pioneers in many ways in the electric two-wheeler space Yeah, that's true. They actually started back in 2013 and they were in fact the ones who kind of kicked off this whole electric two-wheeler movement in India. Exactly. And what made Ather's staff? out early on was actually the product itself, right?

You had great design, you had great hardware, and they were also building their own software. So they were making everything, Sigda, from their battery packs, chassis, electronics, power train, even, of course, the software that was, you know, running the whole thing. Right. And actually, that was such a great differentiator back then

because, you know, a lot of early entrance in the space were depending on Chinese imports. and Aether was actually investing, and they invested their first initial five years in R&D to specifically meet the needs of Indian consumers, like local needs, you know? In fact, the company has filed more than 200 patents in India and more than five abroad.

Wow, okay, that's impressive. But the unfortunate truth is that despite all of that, somewhere over time they really seem to have lost their edge I mean, even when our colleagues, Rohan and PGK interviewed Tarun on their podcast 2 by 2 sometime in October last year, they had the third largest market share at the time. True, yeah. And actually, OLA Electric entered the market much later in 2017, but they scaled up so fast. And till four months ago, Ola Electric was the number one electric two-wheeler seller in India. But now it's Bajaj Chetak.

So Aethor may have built a better school. but other companies kind of built the better businesses, you know? And look at Ola. Even Ola could not stay on top of the game now. Bajaj and TBS have the top two spots actually. And Ola is third and Ather, like you just mentioned, Rahil is at number four. So I would love to look at Ola Electric a little more closely for comparison, you know. Okay, that's fair.

Let's go back to August 2nd, 2024. That was the day that Ola Electric. OLA Electric, which, note, at the time was the country's number one electric two-wheeler maker went public, right? And this was a public issue of more than $6,000 crore rupees. It was expected to be India's largest in 2024. But the interesting thing is that the IPO in itself was a bundle of contradictions. Yes, I remember because we did a daybreak episode on it as well. And I also remember, Ola Electric actually decided to list at a significantly lower valuation. Even Ather has, I don't remember specifically how much, but everybody was talking about it,

right, at that time that, you know, it's not the same valuation as before and they're still going to go public. And a lot of people thought it was a very bold move and definitely not something that you see, you know, start-ups do very often. Right, exactly. And the funny thing is at the time, Bhawe Shakarwal, you know, the company's very controversial CEO, made it out to almost be like a magnanimous move, right? Like this was his gift to retail investors, right? Particularly new ones. But of course, not a lot of people bought that argument.

There was obviously something in there for Ola Electric. But the bottom line is that that strategy worked, right? His big, bold bet ended up paying off the stock prices, Zoom post listing. The offering was oversubscribed by about four times by the final day. And of course, everyone was very pleasantly surprised. Yeah, but then again, it didn't take very long, no? You know, three months down the line, Ola Electric saw its stock fall to record lows, actually.

Now I remember that's when we did the episode. And this was around the time it was facing this, you know, huge barrage of customer complaints. It was all over social media about, you know, the poor after-sales services. But again, that aside, I think as far as IPOs go, OLA Electrics, you could call it a success. Ather's, I don't know if we can say the same about Ather. Right, yeah.

I'm sure Ather's founders, you know, Tarun and Swaphnil Jain, were hoping for a lot better, right? Yeah. We actually spoke to our colleague, Suprita Anupam, who covers electric mobility for the KEN, to understand what went wrong and what changed for investors in the eight months since OLA Electric List. Yeah. Now, Suprit, unlike what most people are saying and thinking about right now, he says this isn't really about valuation.

The company's overall valuation is pegged at about $12,000 crore rupees and it was offering share prices like Snigda mentioned between about $304 to $320 each, which is the upper end of the price band. For context, the OLA Electric IPO price band was significantly lower. It was about $72 to $76 per share. But in Suprit's opinion, that isn't what went wrong. Right. Actually, he said it came down to two things, which we mentioned earlier, which is timing and sentiment. And I won't get too much into the market sentiment because I think we're all aware that investors are not in the mood right now to take a lot of risks. Everybody wants to play safe.

And market sentiment and timing are also kind of interconnected. But let's talk about the timing, right? Aether has gone public at a very, you could say, inopportune time for electric mobility space. And because just now, think about it, we saw the implosion of the EV cab fleet, Blue Smart, which we also spoke about on daybreak. Meanwhile, Ola Electric, just like Blue Smart has gotten to some trouble with Sebi. The market regulator has been looking into the EV startup sales data disclosures of late. And just overall, you know, the government is.

looking at EVs through a microscope for any sort of irregularities. Yeah, and while we're on the topic of timing, the other thing to consider here, of course, is the infamous Trump tariffs. Suprit told us that as of now, compared to OLA, at least, ether is more dependent on imports for certain parts, right? And with China putting some restrictions on certain rare earth metals, that does bring in more instability to the market dynamics, right? EV components could end up becoming a lot more expensive.

I'm sure that's something that investors are thinking about. So, yeah, timing is definitely one factor. Also, you know, the other thing that you mentioned, the market sentiment, right? We have to take a moment to kind of try and understand investor sentiment here. Ather's brand identity has always been kind of simple, right? It's always positioned itself as this company that manufactures top-notch premium electric scooters. But maybe, just maybe it's too simple because there isn't really a story there, right? Unlike, say, with Ola Electric, which has always projected this bold nationwide growth story, you know?

Right, you're right, Raul. Actually, Bhawehhhhh, despite all the controversies, is a founder who's always like, he's a very public personality, right? And obviously, it has also, Ola Electric has also showcased to investors. different revenue streams, at least capability of, you know, setting up different revenue streams, whether it is battery manufacturing or charging infrastructure. They've also, I think, unveiled a slew of new bikes and one has already launched, one of the new ones. And obviously, all these things are way more exciting for investors than a company, like you said,

that's singularly focused on assembling electric scooters, right? I mean, after all, this is a very asset-heavy industry. So I guess diversification is very important. Right, but Stigda, let's also not forget that OLA Electric is still not profitable. This whole narrative about its bad servicing hasn't really turned around yet. And, you know, in fact, I was reading somewhere. I think it was an Inc. 42 report where they spoke to this analyst who said, Ola Electric needs to focus on growing sales volumes by at least 30% from recent levels

to actually reach the break-even mark. So it's not looking all that rosy for Ola Electric either. Yeah, that's so true. Also, I wanted to add another point that, you know, Suprit was telling us in the morning. See, you know, times are uncertain with all these new tariffs being placed on Chinese EV imports by the US, by the EU. And obviously, all this instability is going to affect the global EV supply chain.

And Aether is still dependent on important battery cells and other components. So I think now they need to be way more aggressive about localizing just to safeguard themselves in this. Also, sorry, another point before I forget. So Prith was telling us about how this IPO is going to actually help Ather with financial flexibility, right? The kind of needs to build partnerships with domestic suppliers or even kind of backward integrate some parts of its battery chain. these kind of moves will obviously require a lot more money. So strategically, this IPO made a lot of sense. They can really turn things around, you know, this public offering for Ather.

So now the question is what is next? You know, what should Ather do to get back on track? Well, I think in the short term, this isn't quite what Aether may have had in mind, of course. But in the long term, things will eventually look up, right? Just think about it. A couple days ago, Hero Motorcove, which is a key investor in Aether, announced there will be relinquishing special rights in the startup. And of course, that's not out of the ordinary when a company goes public.

But what we really have to look at here is what that could mean for Aether, right? It means more freedom. It means more independence, right? It will give them that space to expand where it wants to expand, grow how it wants to grow. Yeah, that's true. It's kind of been under Hero's shadow for a while. But I also think it'll be interesting to watch, You know, how Aether kind of builds a stronger brand narrative for itself now.

I'm also looking forward to, you know, to see how it actually expands its distribution in North India, right? Because so far, it's had a much stronger presence in the South. Right. Okay, that's about it for today. Thank you for listening to us. What did you think of today's episode? Would you like us to be closer to the new cycle? Let us know.

Also, if you have any thoughts about Aether, IPO, do send us a voice note or a text on our WhatsApp number. It's 8971-08379. I'll repeat that. 8971-08379. We'll also add it to the show notes of this episode. Right. And if you like this episode, please don't forget to share it with your friends and also rate us on whatever podcast platform you're tuned into. Thank you and see you tomorrow.