Ather Energy, an Indian electric two-wheeler manufacturer, has filed for an IPO of Rs 4,500 crore ($536.2 million) at a valuation of $2.5 billion, a source with direct knowledge of the subject said on Monday, trying to capitalize on a hot stock market weeks after bigger rival Ola Electric went public.

Ather would offer additional shares worth Rs 3,100 crore in the IPO, according to draft documents submitted with the market regulator. Existing investors and certain senior shareholders, including co-founder and CEO Tarun Sanjay Mehta, are selling shares worth Rs 1,400 crore in the float, according to a source who declined to be identified since the information is secret.

Ather manufactures electric scooters and competes with the recently listed Ola Electric. Hero MotoCorp, Ather's largest stakeholder at 37.2%, would not sell shares in the IPO. The IPO is the most recent in India's thriving stock market, which has seen over 200 businesses raise more than $7 billion through IPOs this year, according to LSEG statistics.

Market leader Ola Electric, which floated following a $734 million IPO on August 9 and is one of India's largest this year, more than doubled from its IPO price of Rs 76 before reducing some gains.

Adoption of electric vehicles is still low in India, but it is increasing as Prime Minister Narendra Modi's government supports sustainable energy. Ather plans to utilize the money from the IPO to build an electric two-wheeler plant in India's Maharashtra state, as well as for research and development.

According to the prospectus, the company's loss increased for at least the second consecutive year in fiscal 2024, to Rs 1,060 crore from Rs 864 crore the previous year. Axis Capital, JM Financial, Nomura, and HSBC are the book-running lead managers for the issuance.