Emkay Global Sees Ather Energy Reaching Rs 1000

Ather Energy Research Report: Strong Growth Momentum and Expansion Plans

Key Takeaways

• The domestic electric two-wheeler (E-2W) industry is experiencing strong growth momentum, with a year-over-year increase of 20-30% during December 2025 to February 2026.
• The industry growth is driven by the >Rs0.1mn segment, while the <Rs0.1mn market volume is showing signs of bottoming out.
• The E-2W industry's growth has not been slowed down by the increase in internal combustion engine two-wheelers (ICE-2Ws).

Ather Energy's Expansion Plans

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• Ather Energy's Electric L (EL) platform, which targets the Rs0.1-0.13mn segment, is expected to meaningfully expand the company's total addressable market (TAM), margins, and market share, especially in non-South markets.
• The EL platform is expected to provide huge mechanical cost savings while retaining quality and software, leading to improved margins.
• Cannibalization of the traditional Ather platform by the EL platform is welcome, given its superior cost structure and margin.

Capacity Expansion and Margin Benefits

• Ather Energy's AURIC plant, with a capacity of 42,000 units per month, is expected to be fully operational before the end of fiscal year 2027.
• Margin benefits from the capacity expansion are expected to accrue in the ensuing quarters.
• High-volume variants are expected to be launched once the plant stabilizes.

Industry Outlook and Price Hike

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• The E-2W industry is expected to see a price hike from April 2026, due to the expiry of the PM E-Drive scheme in March 2026.
• Ongoing geopolitical tensions may cause a temporary 300-400bps hit to the industry, but OEMs may raise prices or absorb the impact.
• Ather Energy is expected to achieve EBITDA/PAT breakeven in the second half of fiscal year 2027.

Recommendation

• We retain a BUY recommendation on Ather Energy with a target price of Rs1,000, based on an earnings multiple of 7x EV/S, which is comparable to the implied valuation of 7.5x EV/S for EIM's RE over the 2013-17 high-growth phase.