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News: As per media sources, Ather Energy, a leading player in the e-mobility space and an associate company of Hero MotoCorp (equity stake pegged at ~35%) is looking to list on Indian Stock Exchanges and is actively engaging with investment bankers for the same. It plans to list at a valuation of US$ 2 billion and eventually raise US$ 400 million through the IPO route. In FY23, Ather clocked revenues of ₹ 1784 crore (₹ 409 crore in FY22) and did loss at the PAT level to the tune of ₹ 865 crore (₹ 344 crore in FY22).
Views: As of FY23 annual report, Hero’s total equity investment in Ather is pegged at ~₹ 900 crore and it has investment close to ₹ 500 crore in FY24YTD taking its total equity investment to ₹ 1,400 crore. Its 35% stake at a valuation of US$ 2 billion is valued at US$ 700 million i.e.₹ 5,800 crores implying 4x returns on invested amount. It could potentially add ~₹220 (~4.5% of CMP) to our target price calculation. These are initial talks and we shall closely monitor developments on this front. This is sentimentally positive for the stock.
Impact: Positive