Ather Energy, the Indian startup behind electric two-wheelers, has downsized its initial public offering (IPO) to 26.26 billion Indian rupees ($308.3 million), a reduction of 18% from its initial plan. The Bengaluru-based company confirmed to TechCrunch that it is targeting a post-money valuation of $1.4 billion, lower than its previous aim of $1.5 billion to $2 billion last September.

The decision to trim the IPO size and target valuation is attributed to current market conditions, which have been volatile in recent times. Ather's move is seen as a pragmatic response to the changed market landscape, ensuring a successful listing despite the challenging environment.

According to the new draft prospectus filed on Tuesday, existing Ather shareholders will sell 11.1 million shares, down from the 22 million shares mentioned in the previous draft prospectus. The bidding for Ather shares will open for three days starting April 28, with anchor investors participating in a private placement on April 25. Notably, Hero MotoCorp, which owns over 40% of Ather, will not sell its shares in the IPO.

Ather co-founders Tarun Mehta and Swapnil Jain, as well as investors National Investment and Infrastructure Fund Limited (NIIF) and Tiger Global Management's Internet Fund III, will offload their stakes in the IPO. The startup plans to utilize the net proceeds from the IPO to set up an electric two-wheeler facility in Maharashtra, invest in research and development, and fund marketing initiatives.

The company has seen a 21% increase in sales in 2024, reaching 126,353 units, according to government data. Ather commanded a 10.7% market share that year, as per the CRISIL Report referenced in the draft prospectus. The startup's revenue for the nine months ended December stood at 15.79 billion Indian rupees ($185.4 million), with a net loss of 5.78 billion Indian rupees ($68.3 million), down from 7.76 billion Indian rupees ($91.1 million) a year earlier.

Ather's IPO comes at a time when its rival Ola Electric, which listed on the Indian stock exchanges last year, has seen its share price decline by nearly 42% since its debut. Ola Electric, which held a 34.1% market share last year, listed with a record 20% surge but has struggled to maintain its momentum. Ather's decision to cut its IPO size and target valuation may be seen as a cautious approach to avoid a similar fate.

The Indian electric two-wheeler market has been growing rapidly, driven by government incentives and increasing consumer adoption. Ather's IPO is seen as a significant event in the industry, with the startup's performance likely to have a ripple effect on the broader market. As Ather prepares for its listing, investors and industry observers will be closely watching its progress, given the company's significant market share and ambitious growth plans.