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Indian electric two-wheeler (EV) sector leader Ather Energy Ltd has achieved a major milestone in raising capital to accelerate its expansion plans. Shareholders have approved with an overwhelming majority the proposal for a preferential issue of ₹1,200 crore at the Extraordinary General Meeting (EGM) held by the company. According to the regulatory filing, 97.72 per cent of the total votes cast were recorded in favor of the proposal, reflecting the unwavering confidence of investors on the company’s vision and future growth strategy.
This strategic capital raising move comes at a time when demand in India’s electric two-wheeler market is growing rapidly and there is a race among mainstream automobile companies to increase market share. After this approval from the shareholders, market analysts believe that the financial position of the company will become stronger, which can have a direct positive impact on the company’s valuation and stock sentiment in the upcoming trading sessions.
Big bet of Hero MotoCorp, Founders and India-Japan Fund: Who got how many shares and warrants?
The most important thing about this ₹1,200 crore preferential issue is that it has received huge confidence from the existing promoters, strategic partners and institutional investors of Ather Energy:
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Hero MotoCorp: Hero MotoCorp, the country’s largest two-wheeler manufacturer and the largest shareholder in Ather, is investing a huge amount of about ₹960 crore in this round alone. Hero MotoCorp is being issued 76.19 lakh convertible warrants at the rate of ₹1,260 per warrant, a 7.2 per cent premium to the floor price of ₹1,175.74.
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India-Japan Fund: This bilateral fund of the Government of India and Japan Bank for International Cooperation (JBIC), managed by the National Investment and Infrastructure Fund (NIIF), will purchase 16.26 lakh equity shares worth approximately ₹200 crore. The allotment is taking place at a price of ₹1,230 per share, which represents a premium of 4.6 per cent over the floor price.
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Company Founders (Tarun Mehta & Swapnil Jain): Ather Energy co-founders Tarun Mehta and Swapnil Jain have also personally committed to subscribe for convertible warrants worth ₹20 crore each (total ₹40 crore). The infusion of capital by the promoters themselves gives a clear message that the top leadership of the company is fully confident about its long-term future.
Total mega-fundraise of ₹2,500 crore: QIP and preferential issue will steel the balance sheet
This preferential allotment of ₹1,200 crore by Ather Energy is an integral part of the overall capital raising program of ₹2,500 crore approved by its board. Earlier, the company had successfully raised ₹1,300 crore through Qualified Institutional Placement (QIP).
The company’s QIP issue received an unprecedented response from domestic and global institutional investors, with bids worth over ₹10,000 crore received. Now, with the completion of QIP of ₹1,300 crore and preferential issue of ₹1,200 crore, fresh liquidity of approximately ₹2,500 crore has become available to the company. The company will use this huge capital to increase its production capacity, develop new technology platforms, expand retail outlets and build a strong debt-free balance sheet.
New plant with capacity of 5 lakh units in Chhatrapati Sambhajinagar: Big jump in manufacturing
A major part of the capital raised is being used to double the company’s manufacturing capacity. Ather Energy has officially confirmed that its new mega manufacturing plant at AURIC (Aurangabad Industrial City) in Chhatrapati Sambhajinagar (Aurangabad), Maharashtra is rapidly getting ready.
This state-of-the-art plant is on track to be fully commissioned in the third quarter (Q3) of the current financial year. The commencement of this new plant will directly increase the company’s annual production capacity by 5 lakh (5,00,000) units. This new facility, combined with the existing plants located at Hosur in Tamil Nadu, will prove to be a game changer in rapidly meeting the growing demand in the western and northern states of the country and reducing logistics costs.
Explosive entry of ‘Ather Konarc’ on 29th August: The mood of the market will change with the new EL platform.
Ather Energy is not only expanding its factories but is also going to bring a revolutionary change in its product portfolio. The company is preparing to introduce a new series of vehicles based on its much-awaited new ‘EL Platform’.
The first electric scooter ‘Ather Konarc’ built on this new platform will be officially launched on August 29 on the occasion of the annual ‘Ather Community Day’. Automobile experts believe that after the immense success of the 450 series and family-oriented ‘Ather Rizta’, ‘Konark’ will target the broader mass-market segment with more range, advanced software features and competitive pricing, which is expected to lead to a multi-fold jump in the company’s sales.
Big improvement in financial condition: Company becomes EBITDA positive in June quarter
The most encouraging news for investors is that Ather Energy has achieved great success in achieving operational profitability. The company has recorded EBITDA Positive in the June quarter of the financial year.
Going from losses in the initial stages to becoming EBITDA positive is considered a historic milestone for EV startups. According to official data from the Indian government’s ‘Vahan’ portal, Ather Energy remains the country’s third-largest electric two-wheeler manufacturer and commands about 16.2 percent market share. Over the past one year, the company has increased the number of its retail touchpoints from 350 to over 700, thereby unprecedentedly expanding the reach of its scooters in Tier-2 and Tier-3 cities.
Competition from Ola Electric, TVS and Bajaj: Will there be a big rise in the stock?
At present, the competition in the Indian electric two-wheeler market has reached a very exciting point. On one hand, big companies like Ola Electric, TVS Motor (TVS iQube) and Bajaj Auto (Bajaj Chetak) are expanding their presence, while on the other hand, Ather Energy has created a premium and reliable identity for itself on the basis of strong engineering, reliable hardware, in-house battery pack and nationwide ‘Ather Grid’ fast charging network.
Stock market analysts and brokerage firms believe that the huge fund infusion of ₹2,500 crore, backing from Hero MotoCorp’s strong parentage, the commissioning of a new factory and the upcoming launch of new models could take the company’s valuation to new heights. The approval of the fundraise by shareholders at a premium valuation indicates that in the coming days, there may be strong buying by investors in the shares of Ether and the stocks of partner companies. Under the vision of clean energy, reduction in carbon emissions and self-reliant India, this step of Ather Energy is all set to write a new golden chapter in the Indian mobility sector.