Why Ather Wants A Fresh Infusion Of Funds Just A Year After Its IPO

by · Inc42

SUMMARY

  • The Bengaluru-based startup is now eyeing the raise of ₹2,500 Cr via a qualified institutional placement (QIP)
  • The proposed fundraise, in one or more tranches, will be used to support research and development, expand marketing initiatives, repay or prepay certain borrowings, and meet other corporate requirements
  • For Ather, the next challenge is scaling nationally while preserving margins, which is why it is now entering a more investment-intensive phase of its growth.
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Over a year after raising ₹2,626 Cr via its IPO, Ather Energy is looking to raise more fresh capital. The Bengaluru-based startup is now eyeing the raise of ₹2,500 Cr via a qualified institutional placement (QIP).  

Since its listing, the E2W maker has managed to significantly boost its sales footprint, clock record revenues, improve market share and significantly narrow its losses.  

The company’s expansion spree also explains why it is going fundraising again. Unlike many companies that raise capital to improve their balance sheet, Ather is trying to raise capital after delivering what management described as a “breakthrough year”. 

FY26 saw Ather deliver its strongest fiscal performance. On the back of a 69% YoY uptick in annual sales volumes, the company’s top line surged 66% YoY to ₹3,823 Cr. Besides, it also made meaningful progress on profitability, with EBITDA margin improving sharply to -2.5% in the March quarter.

With its market share also nearly doubling YoY to 18.6%, FY26 saw Ather establish itself as one of the fastest-growing players in the segment. 

However, the opportunity continues to remain significant. Brokerage CLSA estimates that India’s E2W market could expand nearly 40% annually between FY26 and FY30. For OEMs like Ather, that creates a strong incentive to invest ahead of demand and build the capacity and distribution infrastructure needed to capture a larger share of the market.

The next challenge will be scaling nationally while preserving margins. In a bid to address this, Ather is now entering a more investment-intensive phase of its growth journey.

The proposed fundraise, in one or more tranches, will be used to support research and development, expand marketing initiatives, repay or prepay certain borrowings, and meet other corporate requirements.

However, a question that lingers on investors’ minds is, “Why is a recently listed company out to raise capital again so soon?” 

The questions seem to have weighed on investor sentiment, with Ather’s shares tanking close to 8% since the QIP announcement. 

Let’s look deeper into Ather’s business to make sense of the QIP.

Ather Chases Fresh Fuel

EV companies typically consume capital long before the benefits appear in their income or on their balance sheets. New factories must be built before volumes arrive. Inventory has to be secured before demand materialises. Dealers need to be onboarded before market share can be won. 

To double down on its production, the company is building its Factory 3.0 in AURIC (Aurangabad Industrial City) in Maharashtra. When completed, the facility’s annual production capacity is expected to be around 10 Lakh units annually. The first phase of the facility is expected to become operational in Q3 FY27 and will support production of the company’s upcoming, highly anticipated line of electric scooters EL range. The range is Ather’s next-generation scalable escooter architecture. 

Simultaneously, Ather’s management also acknowledged the inflationary pressure on global supply chains caused by the conflict in West Asia. While it managed to navigate much of FY26 through strategic sourcing and inventory planning, the company is now bracing for some of these near-term pressures arising from the disruptions. 

Under these circumstances, a stronger balance sheet offers flexibility. Rather than waiting for capacity bottlenecks to emerge, Ather appears to be choosing to invest ahead of demand and cut dependence on foreign vendors. 

To establish this, the company is broadly targeting two key focus areas to bolster its position.

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