Ather Energy, a prominent player in the electric two-wheeler (E2W) market, has delivered a strong performance in its second quarter, with financial results surpassing street expectations. The company's revenues soared by 63% year-on-year, outperforming analyst estimates by 7%.
Q2 Performance Highlights
The impressive revenue growth was primarily driven by a 42% year-on-year increase in sales volume and a 15% sequential rise in the average selling price (ASP) of its vehicles. Crucially, Ather Energy's EBITDA margin turned positive at 0.8%, a significant achievement that beat Emkay Global's estimate of a negative 3.8% margin. This turnaround occurred despite persistent commodity price pressures, attributed to strategic price adjustments, structural cost efficiencies, and a favorable product mix.
The positive EBITDA marks a pivotal moment for the company, reinforcing its operational strength and paving the way for sustained profitability.
Brokerage Outlook and Target Prices
Following these encouraging results, several leading brokerages have revised their outlooks and target prices for Ather Energy shares, forecasting substantial growth potential. Analysts collectively see an upside of up to 33% from the stock's closing price of Rs 1,575 per share on Monday.
- Axis Capital's Nishit Jalan set the highest target price at Rs 2,100.
- Nomura's Kapil Singh projected a target of Rs 2,070.
- CLSA's Rishi Kapadia recommended 'Accumulate' with a target of Rs 2,000.
- Nirmal Bang maintained a 'Buy' rating, revising its target to Rs 1,980.
- HSBC's Yogesh Aggarwal issued a 'Buy' recommendation with a target of Rs 1,800.
- Equirus Securities' Mihir Vora set a target of Rs 1,788.
- Avendus Spark's Mukesh Saraf, while having the lowest target among the mentioned, still suggested a Rs 1,770 target, indicating a 12.4% upside.
- Emkay Global reiterated its 'Buy' rating and raised its target price by 2% to Rs 2,250, citing increased ASPs, improved margins, and volume ramp-up.
Nirmal Bang lauded Ather as India's leading pure-play E2W manufacturer, supported by robust R&D, proprietary software, and an extensive network of over 700 stores. The brokerage anticipates a 55% revenue CAGR over FY26-28E, driven by increasing EV penetration, the ramp-up of its EL platform, and network expansion.
Future Growth and Capacity Expansion
Demand for Ather Energy's products remained strong throughout Q2 and is expected to continue, with an unrealized retail potential of 18,000-20,000 units per month. To meet this growing demand, the management has approved significant capacity expansions. An additional 75,000 units per annum (kpa) capacity will be added at its Hosur facility, along with 150 kpa at Auric Phase 1. These expansions will boost the company's total manufacturing capacity to 1.1 million units per annum by Q2 FY28, ensuring it can capitalize on the burgeoning EV market.