In a move that shows the growing confidence in the electric two-wheeler (EV) market, Hero MotoCorp, India’s largest two-wheeler manufacturer, has announced that it will buy an additional 2.2% stake in Ather Energy for ₹124 crore. This secondary transaction brings their stake to 39.7% in this Indian EV start-up based out of Bangalore.
The deal underscores Hero MotoCorp’s strategic push into the electric vehicle segment as they foresee rapid growth in India. Ather Energy is one of the top players offering high-end electric scooters in this field. The investment strengthens Hero’s position in the EV race and gives them insights and technical expertise which are valuable to them.
Let’s see why this deal is significant and how both companies will benefit.
Hero MotoCorp bolsters stake in Ather Energy
This isn’t Hero MotoCorp’s first foray into the world of electric two-wheelers. Since 2016, the company has strategically invested in Ather Energy. In recent Hero MotoCorp news, on June 6, 2024, Hero MotoCorp declared its intention to purchase an extra 2.2% stake in Ather Energy, amounting to ₹124 crore.
Hero MotoCorp Ltd is currently in the process of buying more shares from a current shareholder, with the transaction expected to be finalised by July 31, 2024. Currently, Hero MotoCorp holds a significant 39.7% stake in Ather Energy.
Ather Energy’s most recent round of funding took place at an implied valuation of ₹5,636 crores, a premium compared to the ₹4,666 crores valuation at which Hero MotoCorp invested ₹140 crores in December of the previous year.
Amid consecutive fundraising rounds, Ather Energy’s board recently approved a plan to raise ₹286.5 crores through a combination of equity and debt.
The company is also in the final stages of securing $75-90 million in primary funding from both new and existing investors. This funding round is expected to be spearheaded by a current investor and could potentially value the company between $850 million and $1 billion.
Interestingly, just a day after Hero MotoCorp increased its stake in Ather Energy by an additional 2.2%, it was revealed that the stake was sold by Flipkart co-founder Sachin Bansal. Bansal divested his remaining 7.5% stake in the EV giant. Hero MotoCorp acquired a 2.2% stake for ₹124 Cr, while the remaining 5.3% was sold to Zerodha co-founder Nikhil Kamath.
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About Hero MotoCorp Ltd
With a rich history dating back to Hero Cycles, Hero MotoCorp Ltd, formerly known as Hero Honda, emerged in 1984 through a collaboration with Japan’s Honda.
In 2011, the Munjal family, Hero MotoCorp’s owner or the company’s promoters, acquired full ownership, leading to a name change to Hero MotoCorp.
Today, it reigns as one of India’s leading two-wheeler manufacturers, boasting a significant market share of around 27% (as of Jan 2024) and offering a diverse range of motorcycles and scooters.
Hero MotoCorp’s share price news: Hero MotoCorp’s share price today, as of June 11, 2024, is ₹5,744.00.
If you look at Hero MotoCorp’s share price history – Hero MotoCorp’s price has increased by 115.11% in the last five years.
Must read: Hero MotoCorp’s Q4 results: Shares price rises as profits surge!
Ather Energy: Pioneering innovation in electric scooters
Ather Energy, a leading electric two-wheeler firm established in 2013 by Swapnil Jain and Tarun Mehta, is creating a significant impact in the Indian market.
Beyond manufacturing, building, and maintaining its e-scooters, Ather takes a comprehensive approach by operating its own charging infrastructure and managing related services like power storage and distribution.
While scooter sales remain their primary revenue stream, after-sales and subscription services offer additional income channels. As of May 2024, Ather holds the fourth position in the Indian electric two-wheeler manufacturer landscape, capturing a 9.45% market share behind Ola Electric, TVS, and Bajaj.
The company reported a slight decrease in revenue for the financial year 2023-24, with earnings dropping to ₹1,753.8 crores from ₹1,780.9 crores the previous year.
In FY23, the company experienced a significant increase in net loss, which rose 2.5 times to ₹864.5 crores. By comparison, its competitor Ola Electric saw its net loss nearly double to ₹1,472 crores in FY23, while its revenue surged more than sixfold to ₹2,782 crores year-on-year.
Looking ahead, rumours suggest a potential public listing in the latter half of 2024, aiming to raise $400 million at a valuation of $2 billion.
Why is this deal significant?
For several reasons, the decision by Hero MotoCorp to increase its stake in Ather Energy is of great significance. First and foremost, it points to the increasing acceptability of electric vehicles in the world market due to environmental concerns and regulatory push for cleaner mobility solutions. By associating itself with Ather Energy, Hero MotoCorp shows its commitment to embrace this shift in paradigm at an early stage.
This investment is also an indication that Hero MotoCorp has understood the potential of Ather Energy’s innovative products and technology-oriented approach towards disrupting the EV space. As the world transitions towards electrification, partnerships like these facilitate knowledge sharing, synergies, and accelerated development of next-generation mobility solutions.
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What does this mean for Ather Energy?
For Ather Energy, Hero MotoCorp’s increased stake not only validates its vision and capabilities but also provides access to valuable resources, expertise, and a vast distribution network. By leveraging Hero MotoCorp’s extensive experience and market reach, Ather Energy can scale its operations, expand its presence, and accelerate the adoption of electric scooters across diverse geographies.
With Hero MotoCorp’s backing, Ather Energy is well-positioned to consolidate its position as a frontrunner in the electric mobility ecosystem and drive positive change in the automotive industry.
Conclusion
In conclusion, Hero MotoCorp’s decision to acquire an additional stake in Ather Energy underscores its strategic intent to play a pivotal role in India’s electric mobility revolution.
By forging partnerships, investing in cutting-edge technologies, and championing sustainable practices, Hero MotoCorp and Ather Energy are poised to lead the charge towards a cleaner, greener, and more sustainable future for mobility in India and beyond.
