[TusharK]

Hero MotoCorp has increased in stake in Ather Energy by purchasing shares worth Rs 140 crore.



Hero is the largest investor in the Bangalore-based electric scooter maker. With the purchase of additional shares, the company has increased its stake from 36.7% to 39.7%.

Earlier this year, Ather Energy raised Rs 900 crore in fresh funding from Hero MotoCorp and GIC. Hero had also participated in a round of investment to raise $128 million back in January 2022.

Recently, Hero MotoCorp and Ather Energy signed an agreement to develop an interoperable fast-charging network for 2-wheelers in India. The companies plan to set up over 1,900 fast charging points across more than 100 cities.

Source: ET Auto

Link to Team-BHP News

[hemj]

What is the point of starting their own brand with Vida, if they already own 40% of Ather? I hope they don't do the hostile takeover, take the technology and then kill the ather brand like what big brands usually do with small brands.

[ohaak]

A potential collaboration between Hero and Ather could be highly beneficial, where Hero facilitates the sales and after-sales services for Ather's products through its extensive dealership and service network. However, it seems that the traditional internal combustion engine (ICE) sector may be hesitant to accelerate the adoption of EV two wheelers, possibly viewing it as a threat to their existing market.

Ather's products have proven to be reliable. Their efficient fast charging capability and network is good. Although the after-sales service might be costly, it is effective when needed. (However, there seems to be a noticeable lack of availability of Ather accessories in the workshops around Pune.)

From my perspective, Ather is like a goose that lays golden eggs. The main issue appears to be the rate of production which is not meeting the demand. Despite the higher price point, Ather's products continue to achieve respectable sales figures throughout the country, even with a limited sales network.

[Rahulkool]

Originally Posted by hemj

What is the point of starting their own brand with Vida, if they already own 40% of Ather? I hope they don't do the hostile takeover, take the technology and then kill the ather brand like what big brands usually do with small brands.

Ather is much bigger brand here than Vida, i dont see why they will kill the better brand and continue with Vida. Hero can not launch EV under hero brand name due to some family dispute, Ather is here to stay.

[aargee]

Originally Posted by Rahulkool

Ather is much bigger brand here than Vida, i dont see why they will kill the better brand and continue with Vida. Hero can not launch EV under hero brand name due to some family dispute, Ather is here to stay.

Rahul bhai, it's a good time to "invest" in Ather because
1. The name Ather has a very good brand value
2. Sales are declining & they've very much declined in 2023
3. Since Ather is launching new products {Ather invests heavily on R&D}, it's a good buy {if Ather repositions itself in the market} or own {decline brand value in long term}

[Fx14]

Isn't the IPO of ATHER coming soon?

Hero probably wants to get a bigger piece of ownership before the price takes off

[sri_tesla]

Rs 140 crores for a 3% share means, Ather is valued at Rs 4,666 crores? Ather has raised $400 million since inception and at current exchange rates valued at Rs $560 million. Ather had posted huge losses year after year vs revenue and cash flow were also very bad. They were surviving by raising money at regular intervals and were able to do so because of continued growth in sales.

In FY23, Ather posted a Rs 864 crore loss on Rs 1784 crore revenue. Fixed costs were exorbitant. As per the official information below, ~40% of the expenses have nothing to do with the cost of materials. Ads, employee benefits, and others account for 40% of the expenses which is huge, especially at such higher volumes.
https://entrackr.com/2023/09/ather-e...es-surge-2-5x/



Ather's market share and sales have been declining for the last few months. Ola, TVS, and Bajaj have overtaken Ather in sales in the last 2 years and their lead has been growing while Ather sales have stagnated or declined. Even Hero's Vida sales are growing at a decent rate. I feel Hero is just biting its time to pick up more ownership in Ather as the valuation has been declining at a faster rate. This latest stake sale seems to have come at a much cheaper rate than the broader fundraiser done by Ather just 3 months back in September. If the sales continue to decline, Hero will probably try to buy the controlling stake from other investors.

[Gansan]

It must be an investment with an eye on the future. Currently Ather sales are nothing to write home about. I dont think they make enough revenue out of sales to keep the operations going. They must be dipping into VC funds.

Though significant as far as EV sales go, their monthly volumes are less than the lowest selling IC models of Heromotocorp, more or less. And Heromotocorp Vida model will scale up quickly with their pan India presence, though it has crossed 1000 units a month only recently. The same reach across the country can also help Ather in the long run.

I don't think even Ola with their sales of ~ 30k a month, makes enough to sustain their operations from sales revenue alone.

[pogo0120]

What is the point? What is Hero getting here?

Is Hero, taking over Ather? NO
Is Hero taking technology of Ather to make own products? NO.
Is Hero entering to market with Ather? No. Hero is an established two wheeler maker. Ather too!
Is Hero going to mint millions when Ather goes for IPO?
Well, for Ather to succeed, Hero may itself have to fail in electric two wheeler space. If VIDA beats Ather, how will Ather bomb IPO market.

Makes no sense! But lot of things in MBA world doesn't make sense
Deepika Padukone face on Axis Bank marketing also made no sense.
But she was the brand ambassador for Axis Bank. It's like, people will see her face and come to bank to put FD or take loan.

MBA people!

[DIY410]

Why is Ather spending so much on Ads, they have increased spending on Ads. In this day and age especially for EV, which have a higher curiosity. The two negatives of Ather is the product line is old but this is only recent. After the original 450, the moment they shifted to Ather 450x the prices went high. So the reason Ola and TVS sell more is because they are priced lower. So why is Ather spending money on Ads, they could have reduced the price by 10k and it would have sold more.

[itspatra]

Originally Posted by hemj

What is the point of starting their own brand with Vida, if they already own 40% of Ather? I hope they don't do the hostile takeover, take the technology and then kill the ather brand like what big brands usually do with small brands.

I hope this acts more like a Hyundai Kia partnership ,where Hyundai is a parent company of Kia and both share platforms and technologies.

[shresan23]

Originally Posted by Rahulkool

Ather is much bigger brand here than Vida, i dont see why they will kill the better brand and continue with Vida. Hero can not launch EV under hero brand name due to some family dispute, Ather is here to stay.

I dont really think Hero will takeover Ather. After the dispute, Hero was hit pretty hard. A turnaround attempt like this will cost Ather and Hero. Also, it is not about the brand anymore. Hero is being smart here. They are doing the same Toyota-Maruti or Kia- Hyundai thing and using the intellectual resources of Ather. Frankly, Hero has not been able to crack the EV market, depsite being affordable. People are willing to spend a few K extra to get the entry level Ola or TVS, which is hurting the company. So, Hero is doing the smart thing. Ather is established, Hero's Vida is not. There will be distinction. It wont be as blatant as the toyota maruti (glanza-baleno), but the similarities will be visible.

Originally Posted by sri_tesla

Rs 140 crores for a 3% share means, Ather is valued at Rs 4,666 crores? Ather has raised $400 million since inception and at current exchange rates valued at Rs $560 million. Ather had posted huge losses year after year vs revenue and cash flow were also very bad. They were surviving by raising money at regular intervals and were able to do so because of continued growth in sales.

I wont say this is healthy, but from a tax point of view, they might be saving quite a lot. The 4666 crores is a bloated figure, by the market. The real valuation might be way less and like pointed by someone before, Hero is also waiting for the IPO. The fact that Hero has 40% of shares, will attract some big investors. After the IPO is over, the price would have gone up to a point where, Hero would be able to sell 1% of their holdings for the price they invested. Of course, this wont happen, its just to put things into perspective.

Usually companies like this, show losses to save tax. Also, i would be more focused on the material consumption. It has gone from ~50% to ~60% . Also, 50% of 760 crores is a lot less than 60% of 2670 crores. What is up with that? I dont see many reports of changes in quality. If any, RM charges for the Battery are supposedly going down.

Originally Posted by Gansan

It must be an investment with an eye on the future. Currently Ather sales are nothing to write home about. I dont think they make enough revenue out of sales to keep the operations going. They must be dipping into VC funds.

Exactly. But, i dont think the revenue is that small. I mean, they are making barely enough to keep operations going. They go into losses when the debt hits or more specifically, cost of debt or capital hits, which is usually how these companies function. I wouldnt say its bad. But we dont see Ather kanjoosing out on things. They are going for something else here.

All of this is just my opinion. I might be hilariously wrong too.

[vamsi.kona]

Originally Posted by pogo0120

Makes no sense! But lot of things in MBA world doesn't make sense
Deepika Padukone face on Axis Bank marketing also made no sense.
But she was the brand ambassador for Axis Bank. It's like, people will see her face and come to bank to put FD or take loan.

MBA people!

Majority of marketing, especially through TV ads for products like Finance etc, is more for creating a brand recall than anything else. It's obvious that no sane person would opt for Axis Bank by seeing Deepika's face, but that most certainly wouldn't be the aim at all. It is just to create a brand recall. I read long back that people, most of the times, tend to go with the purchase of the first brand that they recollect when they think of some product. So any brand that is able to occupg that space has some guranteed sales. For example noodles and Maggi. Many probably even use the term interchangeably.

I don't have experience or degree in marketing but worked closely with them and read a few things long back.

[Boomerang]

Two things are certain now. The freedom of founders ends here. Focus will move from quality to balance sheet. My estimate, Hero will turn this company around within 6 Quarters.
I would book an Ather right away when quality is topnotch.

[NiInJa]

Here is my take

Originally Posted by pogo0120

What is the point? What is Hero getting here?

Is Hero, taking over Ather? NO

Not yet. But, they are getting close to becoming majority stakeholder slowly.

Originally Posted by pogo0120

Is Hero taking technology of Ather to make own products? NO.

Clearly, Hero has seen something in Ather that is making them increase stake. It might not be getting all of Ather's engineering prowess, but might be as simple as manufacturing process of battery scooters or user data, we don't know that! Or, Ather is learning the science of expanding two wheeler sales and service network from Hero. Remember, small electric scooters are here for some time but we are just warming up to the idea of proper electric bikes, then it will be electric maxi-scooters.

Originally Posted by pogo0120

Is Hero entering to market with Ather? No. Hero is an established two wheeler maker. Ather too!

Ather seems like a premium brand with much better fit and finish and customer experience, they might just keep it that way. Hero, is and will always be a mass market player. They launched a proper premium 200cc bike just this year and have just one 160cc bike worth mentioning, compare that to their 100-125 bike list!

Originally Posted by pogo0120

Is Hero going to mint millions when Ather goes for IPO?
Well, for Ather to succeed, Hero may itself have to fail in electric two wheeler space. If VIDA beats Ather, how will Ather bomb IPO market.

Vida and Ather, I feel, will have different customer base. Ather needs money to be the premium brand they are (and/or projecting to be), Hero needs technical knowhow of electric scooters asap if they want to retain number 1 two- wheeler company position, 15 years from now.