Ather Energy IPO subscribed 27% so far on Day 2: Retail portion fully booked; no response from QIBs

The ₹2,981-crore initial public offering (IPO) of Ather Energy, which opened for subscription on April 28, has received muted response from investors so far, with the issue receiving 27% bidding on the second day. Investors applied for 1.41 crore equity shares compared to the offer size of 5.33 crore shares, the data on exchanges showed.

The issue managed to garner support from retail investors, as the quota reserved for them subscribed 1.05 times. However, the qualified institutional investors (QIBs) have not submitted any bids for the issue yet.

On the other hand, the portion set aside for non-institutional investors (NIIs) was booked 0.25 times, while employee’s portion was the most aggressive as that window was subscribed nearly 3 times.

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The company has reserved up to 75% of public issue for QIB, 15% for NII, and remaining 10% for retail investors. The employee quota has been reserved up to 100,000 equity shares, which will be offered at a discount of ₹30 per equity share.

The encouraging response from retail investors is a positive sign for the company, which has already garnered ₹1,340 crore from marquee international and domestic anchor investors.

Meanwhile, the falling grey market premium (GMP) of Ather Energy IPO remains a key concern, as it raises the questions on the electric vehicle maker’s viability and future potential. As of now, the GMP stands at ₹1, dropping sharply from ₹17 on April 22, albeit it has improved from zero level touched on April 27. This can be attributed to various factors, including the company's financial health and lack of public excitement amid fragile market conditions.

The three-day IPO of EV startup will close on April 30, while shares are expected to be listed on the BSE and NSE on May 6, 2025. The electric vehicle maker has set a price band of ₹304-321 per share for its IPO, which is a combination of fresh equities and offer for sale (OFS) by selling shareholders.

The IPO of Tarun Mehta and Swapnil Jain co-promoted firm comprises of fresh equities worth ₹2,626 crore and OFS of up to 1.1 crore shares, which at the upper end of the price band amounts to around ₹355 crore.

The lot size is 46 equity shares and in multiples thereafter, which means minimal application amount for one lot for retail investor would be ₹14,766 (at upper end of price band).

The IPO has received mixed reviews from brokerage houses, with some, including SBI Securities, recommending "Avoid", citing factors like ongoing losses, high valuation, and dependence on a specific region. On the other hand, Bajaj Broking has recommended subscribing to the issue with a long-term perspective; while Arihant Capital and Ventura Securities have suggested subscribing to the Ather Energy IPO for listing gains.