Quiet listing, loud returns: Ather’s multibagger post-IPO rally brings windfall gains for promoters as returns swell to 3,220%

Ather Energy’s low-profile listing has quietly outperformed many of this year’s high-decibel IPOs, and its promoters have reaped the rewards. The stock has surged 116% over its issue price, delivering multibagger returns, while the promoters’ wealth has skyrocketed by an astonishing 3,220%. Here’s a breakdown of how it happened.

Promoters Tarun Sanjay Mehta and Swapnil Babanlal Jain, who own 5.14% stake each (1.95 crore), in Ather Energy, acquired company’s shares at a weighted average cost of Rs 21.09 per share which is now worth Rs 691 on the NSE. These shares, prior to IPO, cost Mehta and Jain Rs 41.40 crore. With the ongoing rally, the value of these shares is now around Rs 1,368 crore.

In the Ather Energy IPO, they had offered 9.80 lakh shares each at the upper price band of Rs 321 which means that against the investment of Rs 2.06 crore, the take home was 31.45 crore. Their returns stood at Rs 29.31 crore, translating into 1,424% returns.

Both Jain and Mehta also hold equity in the company through their trusts but we have not taken those shares into account while calculating their gains.

Also Read: Swiggy back to square one as stock sinks 36% from peak, returns to IPO price. What’s ahead?

Blockbuster rally

The initial public offering of Ather Energy (IPO) was launched in the final week of April and the issue received a modest investor response, getting subscribed 1.43 times with retail bidding at 1.78 times. The shares were listed at Rs 326 on the BSE and Rs 328 on the NSE, recording a 1.5% and 2.2% listing gains, respectively.But the stock picked up momentum from August after the announcement of its June quarter results, where the company reported a 54% year-on-year jump in its revenue to Rs 899 crore while narrowing its losses. The company also earned Rs 42 crore as other income. Meanwhile, the September quarter losses fell 22% YoY to Rs 154 crore.

Stock’s prospects

Japanese brokerage Nomura is betting on stronger visibility on market share and relatively low competition risk from Ola.

While its network of 500 stores is still more than 50% less than its peers, Nomura analyst Kapil Singh sees scope for improving market share further, led by store expansion and launch of the ‘EL’ platform in FY27 and the ‘Zenith’ motorcycle in the future. The brokerage conceded that it was positively surprised by Ather’s market share expansion to 20% in October-November versus 14% in Q1.

It has maintained a ‘Buy’ view on the counter for a target price of Rs 790, implying a 13% upside from current market price of Rs 700. It was recommended at a price of Rs 660.

“… we believe Ather could trade in the middle of the trading band of peers (3-7x EV/sales). We assign 5x EV/sales (3.3x previously), discounted to Dec-27F (Sep-27F previously). Ather trades at 4.1x FY28F EV/sales, which is attractive, in our view,” Singh said.

Nishit Jalan, Research Analyst at Axis Capital attributed strong Q2 to market share gains and cost control measures. The medium-term growth outlook has only got stronger, Jalan said in a review. He estimates 43% volume growth CAGR over FY25-30E.

Profitability is expected to improve on BoM (Bill of Materials) cost reduction, efficiency gains, and operating leverage benefits, said Axis note which is co-authored by Pradip Pandey, said.

The Q2 EBITDA loss declined to 14.7% of sales versus 24.8% YoY. They recommended an ‘Add’ rating for a target of Rs 740.

Also Read: FIIs trim stakes in GRSE, BDL and 10 more defence stocks in Sept. Why is the firepower lacking?(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)