Daybreak - Can Ather escape Ola Electric's shadow?

Episode Date: May 29, 2025

Electric two-wheeler maker, Ather Energy, listed on the bourses on earlier in May, but its IPO was subscribed just 1.4X—a modest showing for a company once seen as a premium EV pioneer. The lukewarm response reflected investor fatigue, sparked by Ola Electric’s volatile stock performance, the Blusmart funding controversy, and global supply chain headwinds. Despite a strong product portfolio and a reputation for in-house innovation, Ather faces an increasingly crowded market and mounting pressure to scale.IPO proceeds will fund a new manufacturing plant in Maharashtra, expanded R&D, and marketing—moves aimed at boosting capacity and competitiveness.Yet, with subsidies shrinking and profitability still out of reach, Ather’s long-term success hinges on its ability to grow sustainably, reduce costs, and prove it’s more than just another EV startup riding a fading wave.Tune in.P.S The Ken’s podcast team is hiring! Here’s what we’re looking for.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.Listen to the latest episode of Two by Two here

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Here is something that you probably don't expect to hear about a nearly 3,000-crow-rupy IPO, that it barely moved the needle. Well, as many of you already know, that is what happened with Aether Energy's much-awaited listing earlier this month. And the reason? actually, it might have nothing to do with Ather itself. You see, in the startup world, success often depends on not just your performance, but also the shadow in which you're standing.

And in Ather's case, that shadow is Ola Electric. You remember how Ola went public last year with a bang. Huge retail interests were seen, solid momentum, and then it tanked. One disaster after another and the stock price dropped to two. thirds of what it was listed at. Now, when Ather came up for its turn, investors were naturally hesitant. They were already burnt once and they did not want to take chances again, which is fair enough. So Ather's IPO, which was supposed to be big, kind of limped through the market and subscribed at just 1.4 times. Institutional investors barely crossed 1.7 times. Retail interest was

lukewarm and high net worth individuals or H&Is were even less interested. But here is the twist. Ather is not OLA. These two companies may share an industry, but their strategies could not be more different. Product quality, tech investments, market positioning, Atha has built a more thoughtful premium playbook. But in a market that is shaped by headlines, perception often can be everything. Just look at Ola.

So what happens when a company with solid fundamentals gets caught in the ups and downs of somebody else's story? Today, we will try to understand why Ather's IPO stumbled and what it says about India's electric vehicle sector and whether Ather has what it takes to survive the long road ahead. Because while the listing did not fly high, it did buy Ather something that any startup would kill for, which is time. Welcome to Daybreak, a business podcast from the Ken. I'm your host, Nick Das Sharma, and I don't chase the news cycle. Instead, every day of the week, my colleague Rahal Philipos and I will come to you with one business story that is worth understanding and worth your time. Today is Thursday, the 29th of May.

Hi, I'm Rahil, the co-host of this podcast. And before we jump back in, I just wanted to share some exciting news with you. Daybreak is growing. And we are looking to grow our team too. Now, if you're a journalist who listens to daybreak and thinks, I wish they'd cover this or I know exactly what would make daybreak even better, we would love to hear from you. We're looking for somebody who's curious,

who's driven and passionate about business and tech news. If that sounds like you or somebody you know, please check out the details in the show notes. Applications are open now. And with that, let's get back to the episode. How far can you fly if your reference point is Ola Electric? This is the hard-hitting question that a venture capitalist who works in India's EV space raised about Ather. And the answer, as it turns out, is not very far.

As I mentioned earlier, Ather's IPO was subscribed 1.4 times overall. Quite underwhelming. Institutional investors came in just at 1.7 times. Retail investors were not very enthusiastic, subscribing at 1.8 times, and non-institutional investors just 0.7 times. 0.7 times. That is barely moving the dial. So what do you think was behind this hesitation? Towards Ola Electric. As we mentioned earlier, last August, Ola's IPO launched with much fanfare. But in the months since, the stock has taken hit after hit. Today, it is trading roughly at

two-thirds of its original listing price. And that burn is fresh in the minds of investors, and it has made them vary of any EV play, no matter how solid. Now, here is where it gets ironic. Yes, Ather and Ola operate in the same category, but they are very different companies. Since its founding in 2013, Ather has worked very hard to build a premium made-in-India electric two-wheeler brand. It focuses on in-house research and development, or R&D, homegrown design, and a product-first approach. Ola, on the other hand, has gone after scale. Cheaper vehicles, an aggressive push into manufacturing right down to building their own battery cells. But you see, cell technology keeps changing really fast.

Ola's deep investment in that area looks increasingly risky, especially compared to Ather's Asset Light model. And their service models are quite different too. Ola owns all of its service and experience centers. and Aether relies on third-party partners. But still, none of this is enough to overcome market caution. Omeish Chandrapalilal, the co-founder of Unlisted Zone, summed it up perfectly to my colleague, the Ken reporter Supritanapam.

He said it is not enough to impress retail investors, especially after they've burned their hands once with Ola. And then there was the blue smart fiasco. Another EV startup, the promoters of which were accused of siphoning of 400 crore rupees from public funds. Add to that, Donald Trump's tariff madness and China's tightening rare earth exports to the mix, and you begin to understand why investors were so unenthusiastic. Even Hyundai India's listing struggled, despite strong fundamentals. It was only subscribed 2.3 times in October 2024. So, when Aether listed on the 6th of May at 328 rupees, which is a

modest 2% premium, it slid quite fast. By the end of the day, it was trading at 302.50 The market cap? More than 11,000 crores or $1.3 billion, which, by the way, is more or less the same since its last fundraise in August 2024. But the bigger issue you see is structural. The two-wheeler EV market has gotten very crowded. Legacy players like TVS and Bajarge are are entering it aggressively. They have the trust, they have the dealership networks and scale which gives them an edge. Meanwhile, new players keep flooding the market and many import cheap components from China. Palewal did not mince his words while speaking to the ken. He said that the market might be growing, but fragmentation and commoditization are reducing the attractiveness

of the opportunity from an investor's point of view. So why did Aether go public now? Stay tuned to find out. You see, Aether's IPO was not a strategic play. It was more like a survival move. Let me explain. The EVMaker's expansion had stalled and investor patients was already running thin. Founders Taran Mehta and Swapnel Jain, along with institutional backers like Tiger Global and the National Investment and Infrastructure Fund, decided to offload shares via the offer for sale route. In total, Aether raised fresh issue of more than 2,500 crore rupees.

And they've laid out a clear plan for that capital. A little over 900 crore rupees for a new manufacturing plant in Sambhaji Nagar in Maharashtra. 750 crore to push research and development. 300 crores for marketing and 40 crores to reduce debt. The rest will be spread across the financial year 2026 to 2028. Now, right now, Ather's two plant in Horsesur, Karnataka, can produce about 4,000 20,000 scooters a year. This new facility aims to take that capacity up to 1.5 million annually.

A senior executive told us that decentralizing production is very critical, because state-level EV policies can shift quickly and a more distributed supply chain helps manage that risk. Uday Narang, the CEO of EVMaker, Omega, believes that the next six months will be decisive for Aether. He said that Aether is gearing up for new product launches which could refresh consumer interest and boost top line. Two new platforms are already in development. EL for scooters and Zinath for electric bikes. These will be key in keeping Ather's product portfolio relevant.

Narang also believes that government schemes like PME Drive and state subsidies could act as tailwinds. But he's clear that execution and visibility will make the real difference. But that said, the short-term outlook remains cautious. Market experts warn that the stock won't rally any time soon. Deeb Mukherjee, who is an auto industry veteran, explained it to us. He said that the fund infusion will help expand dealership, and reduce bill of materials. But translating that into free cash flow will be a major challenge.

Right now, Ather is still losing money on every scooter that it sells. And its lineup is limited. It's just the 450 series and the new Ritzar. Mukherjee says that this makes them vulnerable. And then there is Hero Motorco. Yes, it was once a pillar of strength for Aether, but we cannot say the same anymore. Hero still owns 40% of Aether and is listed as a promoter, but internal turmoil is weakening its ability to support the company.

Since CEO Naranjana Gupta's exit in January, there have been a string of departures and the stock has lost nearly half of its value. Devangshu Dattah, the founder of Third Eyesight, a strategy consulting firm, explained what is going on. He said, right now, Hero is both a promoter and a good. competitor for Aether. And this creates a strategic conflict. Hero has not shown any interest in any follow-on investment either. And that puts a cap on Ather's Cappex ambitions. Still, Omega CEO Narang says that there is hope. Because according to him, what matters is execution and forward

visibility and Ather has shown both. The IPO may not have delivered a big bump, but it has bought a third time. Enough maybe to last till the financial year 2027. Now it has to use that time wisely. Invest in new technology, expand its network and manage costs better. Eventually, it'll also need to build new revenue streams. Software, services, maybe even e-bikes or cycles. Products that do not rely on government subsidies to become profitable. Because with subsidies shrinking from 15,000 crore rupees under fame 1 to 5,000 crore rupees today, the real question is this. Can

an Indian EV company survive without government support? The answer? Only if it scales. And fast. And that is a mountain that Aether has to climb now. Daybreak is produced from the newsroom of the Ken, India's first subscriber

focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full-supporting. Subscription unlocks daily long-form feature stories, newsletters and podcast extras. To subscribe, head to the ken.com and click on the red subscribe button on top of the Ken website. Today's episode was hosted by Snigda Sharma and edited by Rajiv CN.