Will Ather Energy reignite IPO buzz? Here’s what GMP trends suggest

The much-awaited initial public offering of Ather Energy India is set to end the primary market dry spell with its issue going to hit Dalal Street next Monday. Ahead of opening of the IPO, shares of Ather Energy were trading at premium in grey market, indicating that investors are confident of the stocks doing well after listing.  

At the time of reporting, Ather Energy shares were commanding a grey market premium (GMP) of ₹6 in the unlisted market, according to investorgain.com. The GMP, however, has dropped sharply from ₹17 on April 22, to ₹10 on April 23, and further by one-third today, showing a discounted trend to the IPO price.

Notably, market sentiment plays a crucial role in influencing GMP. The current market volatility might have contributed to the decline as the domestic equity benchmarks Sensex and Nifty are down over 0.3% today as investors took some breather after recent rally and booked profit at higher levels. In the past seven trading days, the Sensex has risen 6,269 points, or 8.5%, to reclaim 80K levels, and the Nifty 50 added 1,930 points, or 8.6%, to cross 24,300 mark, making investors richer by around ₹36 lakh crore.

Ather to end IPO dry spell

Ather IPO is first mainboard issue after nearly two months, as Quality Power was the last company to list its shares on the domestic bourses – BSE and NSE - on February 24, 2025. Since then, not a single mainboard IPO has been launched, marking a complete standstill in primary market activity, a situation which was last witnessed in May 2023. Most of the companies delayed or paused their listing plans due to sustained market volatility, weak investor sentiment, and unfavourable valuations. 

The electric vehicle maker Ather Energy 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. As a result, the total issue size is calculated to be around ₹2,981 crore, which is sharply lower than earlier estimates of ₹4,000 crore.

In the backdrop of volatility in the secondary market, Ather Energy has cut its fresh issue size from ₹3,100 crore proposed earlier, while it also halved its OFS size from 2.2 crore mentioned in the preliminary documents filed with the Securities and Exchange Board of India (SEBI) in September 2024.

The EV startup is seen raising money at market valuation of ₹12,000 crore, down from ₹14,000 crore projected earlier, amid fragile market conditions and weak investor appetite.

Formed in 2013, Ather Energy designs and develops electric two-wheelers, battery packs, charging infrastructure, associated software and accessories as well as manufactures battery packs and assembles E2Ws in-house.

The electric scooter startup, backed by investors including Hero MotoCorp, Sachin Bansal, Binny Bansal, Tiger Global, and the National Investment and Infrastructure Fund (NIIF), proposes to utilise the net proceeds of the fresh issue towards funding of capital expenditure requirements for establishment of an electric two-wheeler factory in Maharashtra. A part of the capital will be invested in research and development; repayment or pre-payment, in full or part, of certain borrowings availed by the company; expenditure towards marketing initiatives; and general corporate purposes.

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