Troubling Signals from Ather's Silent Launch May Cast Shadows over Indian Electric Scooter and IPO Sectors
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India's homegrown electric scooter manufacturer, Ather Energy, experienced a bumpy initial public offering (IPO) debut, with its shares plummeting more than 4% in Mumbai trading on Tuesday. Despite oversubscribing the IPO, investors expressed hesitance towards the unprofitable sector amid a wider dearth of domestic listings.
Ather, founded in 2013, aspires to be the "Apple" of the Indian electric scooter market with its fast charging capabilities and advanced technology. However, it holds a mere 15% market share, trailing behind industry giants like TVS Motor and Bajaj Auto who have benefited from industry-wide discounting.
Investor Kranthi Bathini, director of equity strategy at WealthMills Securities in Mumbai, commented that the competitive landscape has become increasingly fierce, making it challenging for investors to pick profitable IPOs.
The electric scooter market in India is predicted to expand by 25% in the financial year ending March 2026, following a record sale of 1 million units last year. This growth represents 6% of the total two-wheeler market.
However, after the Indian government reduced industry subsidies, analysts estimate that it may take some manufacturers up to three years to reach breakeven, with pure electric scooter companies facing an average loss per vehicle of up to Rs30,000 ($355).
Financial advisors like Mumbai-based SBI Securities urged investors to steer clear of Ather's debut due to its lack of profitability and escalating competition.
Ather's IPO comes after the high-profile August IPO of sector-leader Ola Electric, which has since faced a decline in sales, along with customer complaints and regulatory scrutiny over its bikes. Ola's shares have plummeted 43% this year.
Initial expectations pointed to 2025 as a follow-up to the previous year's Indian IPO boom. However, numerous awaited $1bn+ listings, including the flotation of the Indian arm of South Korea's LG, have been postponed due to the ongoing US-China trade war and a faltering Indian economy.
The benchmark BSE Sensex and Nifty 50 indices remain below their September peaks, following a slowdown in corporate earnings and a broader downturn for the Indian economy. Indian equity capital market deals amounted to $6bn in the first quarter of 2025, a significant drop from $15.9bn in the same period last year, according to Dealogic data. There have been 41 IPOs in the first four months of 2025, half the amount compared to the previous year.
Bathini suggests that investor caution is driven by uncertainties related to tariffs and geopolitical tensions, prompting investors to stay away. Goldman Sachs co-head of India investment banking, Devarajan Nambakam, noted some foreign institutional outflows and a degree of valuation correction. He remains optimistic, expressing ongoing active engagement with clients on potential IPOs.
In summary, the electric scooter sector's IPO slump can be attributed to a combination of market instability, financial struggles, and intense competition among players. Ather Energy's IPO serves as a prerequisite for evaluating the sector's longevity and potential for future listings.
- The competitive landscape in the Indian electric scooter market is becoming increasingly challenging for investors, making it difficult to identify profitable Initial Public Offerings (IPOs) like the one by Ather Energy.
- Despite Ather Energy's aspiration to be the "Apple" of the Indian electric scooter market, it currently holds only a 15% market share, lagging behind industry giants such as TVS Motor and Bajaj Auto.
- The Indian electric scooter market is predicted to grow by 25% in the financial year ending March 2026, with a growth that represents 6% of the total two-wheeler market.
- Financial advisors have urged investors to exercise caution in the wake of Ather Energy's IPO, citing a lack of profitability and high competition as reasons for avoiding the debut.
- The sector-leader Ola Electric, which had a high-profile August IPO, has since experienced a decline in sales, customer complaints, and regulatory scrutiny, with its shares plummeting 43% this year.
- The ongoing US-China trade war and a faltering Indian economy have led to the postponement of numerous awaited $1bn+ listings, including the flotation of the Indian arm of South Korea's LG.
- Investor Kranthi Bathini suggests that investor caution is driven by uncertainties related to tariffs and geopolitical tensions, prompting investors to be wary and refrain from investing in certain sectors like the electric scooter market.
