The much awaited Ather Enegy IPO will make its D-Street debut today. The issue was subscribed 1.50 times overall. The retail category was a subscription of 1.89 times while QIBs saw 1.76 times subscription. The Grey market premium for the issue has pickwed some traction since last evening. It now shows a 4% uptick from the issue price of Rs 321 per share. The issue is expected to list around Rs 335 a share, up 14 rupees from the issue price.
Analyst views on what price Ather Energy will list at
Financial Express.com caught up with key market players and here is a quick analysis of how they expect the issue to list at –
Deven Choksey, Managing Director of DRChoksey FinServ explained that they have “assigned Avoid, so no price recommendations yet. . Ather is currently offered at a EV/Sales valuation of 6x, which appears overvalued to us. We believe that it can be bought at attractive valuation in the secondary market.”
Ambareesh Baliga, an independent market analyst added that he expects a “flat listing and it may possibly slip into negative too. The IPO had to pushed through and nothing has changed in the last few days to justify a change in view.”
The big worries about Ather Energy IPO
One of the key reasons why the IPO has seen tepid response in the Grey Market is because of the valuation worries. That apart the other key investor concerns include
Reliance on Govt incentives
Ather Energy has acknowledged that the demand in India currently benefits from government incentives like the PM E-Drive scheme . As a result, the retail prices are susceptible to changes and prices could move up significantly once the subsidies are removed . A stated strategic goal is to reduce reliance on such incentives over time as policies can be dynamic and uncertain .
Valuations worries
Valuation is a key factor to watch. According to Deven Choksey Research, Ather Energy is valued at an EV/Sales multiple of 6.0x, “which is higher than that of several established and profitable peers such as TVS Motor (3.5x), Bajaj Auto (5.4x), and Hero MotoCorp (2.7x). In comparison, Ola Electric currently trades at 4.7x EV/Sales. Among major players, only Eicher Motors commands a higher multiple at 9.6x, supported by its strong profitability and premium positioning in the two-wheeler segment.” Overall, Ather Energy’s valuation appears elevated on a relative basis.