Ather Energy IPO: Losses soar to over Rs 1000 crore even as topline remains flat in FY24

As of As of March 31, 2024, the company reported a customer base of 114,000 customers, up from 23,000 customers in March 2022.

Even as EV manufacturer Ather Energy filed its red herring prospectus with the capital market regulator earlier today, its numbers looked less than inspiring, analysts said. Ather’s DRHP revealed that the EV maker recorded flattish growth in revenue and continues to be loss making, with losses crossing Rs 1000 crore in FY24. Analysts believe that its smaller market share could be a concern for investors going forward, as it continues to weigh heavy on the company's profitability.

Market share, competition weighs heavy

Currently, Ather has a market share of around 12 percent, following market leaders Ola Electric, TVS Motor, and Bajaj Auto. As per Ather Energy's DRHP, Ola Electric gained significant market share over the last one year, from 21 percent in FY2023 to 35 percent in FY2024, with a year-on-year growth of 115 percent; it also recorded the highest ever monthly volume of 53,000 units in March 2024.

In terms of revenue, for the financial year 2024, the leader in its peer group is Bajaj Auto at Rs 44,870.4 crore, followed by TVS Motor at Rs 39,144.7 crore, and Hero Motocorp at Rs 37,788.6 crore.

Also read: Ather Energy records slump in customer additions driven by falling ad spends

In 2024, Ather's revenue from operations stood at Rs 1,754 crore, down 1.5 percent from 2023, but a 329 percent increase from 2022. On the other hand, loss before tax rose by 24.7 percent in 2024 to Rs 1,060 crore, up from Rs 865 crore in 2023 and Rs 344 crore in 2022. Net cash used in operating activities decreased by 69.3 percent in 2024 to Rs 267.6 crore, down from Rs 871.3 crore in 2023, and 17.2 percent higher than the Rs 228.4 crore in 2022.

As of March 31, 2024, the company reported a customer base of 1,14,000 customers, up from 23,000 customers in March 2022.

According to Deepak Jasani, Head of Retail Research at HDFC Securities, heightened competitiveness within the space could be the reason behind the company's growing losses. “This could be a source of concern amongst investors,” he said.

Jasani adds that it is possible that the EV space will consolidate with only fewer players leaders, going forward. "Whether Ather Energy is able to see a turnaround, is difficult to ascertain at this junction. Even though its closest peer competitor Ola Electric is also loss-making, it seems to be better poised as it already has the largest market share,” he added.

SBI Securities’ Head of Fundamental Research Sunny Agrawal said that Ather, which focuses on the premium scooter segment priced above Rs 1 lakh, has seen its monthly volumes average between 8,000 and 11,000 units, predominantly from their 450 series. However, he added that recent industry shifts have impacted its sales. "Peers including Bajaj, TVS, and Ola Electric, have launched scooters priced under Rs 1 lakh which has led to a volume impact in the lower segment, affecting Ather's performance,” he said.

Not just competition, the reduction in FAME II and the EMPS incentives compared to FAME I has also played a role in dampening volumes, said Agrawal. He added that although the recent declines in battery prices are aiding gross margins, "localisation is crucial for reducing losses".

Agrawal added that one positive for Ather is that Hero holds a 37.2 percent stake and they have a common charging network.

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