Ather Energy: Nomura India maintains 'Buy', sets target price at Rs 458 per share

Ather Energy's recent financial performance and future prospects have caught the attention of Nomura India, which has maintained a 'Buy' rating on the company, setting a target price of Rs 458 per share.

In its first quarter of the fiscal year 2026, Ather Energy reported a revenue of Rs 645 crore, marking a 79 per cent increase compared to the same period last year. The company's average selling price (ASP) stood at Rs 140,000, a slight dip from the previous quarter. However, the gross margin of 19.6 per cent surpassed Nomura's estimate.

Nomura noted that Ather’s Ebidat loss of Rs 134 crore was 10 per cent better than their projected figure. The reduction in raw material costs per vehicle alongside other expense reductions contributed positively to this outcome. Ather's management has emphasised a strategic ramp-up in the Rizta model to increase market share.

The company is focusing on enhancing customer awareness and confidence in electric vehicles (EV) to drive market penetration. Cost reductions have been attributed to lower cell prices and improved value engineering.

Ather expanded its retail network significantly, adding 95 stores in the first quarter, bringing the total to 446. This expansion is part of its strategy to strengthen its presence in Central and Northern India.

Nomura forecasts a strong growth trajectory for Ather, projecting a compound annual growth rate (CAGR) of approximately 41 per cent for its volumes between FY25 and FY28, increasing from 155,000 units to 436,000 units. This growth is expected to be supported by the doubling of its store count.

Looking ahead, Nomura anticipates Ather’s gross margin to climb to 28 per cent by FY28, aligning with traditional two-wheeler companies. As the Production Linked Incentive (PLI) scheme concludes in FY28, Ather is expected to benefit from peers needing to raise prices to maintain margins.

Ather is projected to reach EBITDA breakeven by mid-FY28, with margins expected to improve further. Nomura's valuation of Ather is based on a 3.3x EV/sales ratio, with the company trading at 2.6x FY28 sales, comparable to other high-growth peers like TVS.

The brokerage highlights the immense growth potential in the EV sector, expecting it to drive the next decade of growth for India's two-wheeler industry. As ICE volumes are projected to peak by FY30, coinciding with the implementation of BS-VII emission norms, EV penetration is anticipated to rise to 19 per cent by FY30 from 6 per cent in FY25.

Nomura's analysis underscores Ather's position as a key player in the EV revolution, with its "EL" and "Zenith" platforms enhancing its competitive edge in the rapidly evolving market.

Ather Energy remains the preferred choice within Nomura's coverage universe due to its promising medium-term growth potential and strategic initiatives to capitalise on the burgeoning EV market opportunities.