Buy Ather Energy; target of Rs 1000: Emkay Global Financial

Buy

Emkay Global Financial' research report on Ather Energy

We met Ather’s management—Tarun Mehta, Co-founder and CEO, and Sohil Parekh, CFO—to discuss E-2W demand trends and Ather’s growth outlook and strategy wrt its EL platform. KTAs: 1) Domestic E-2W industry seeing strong growth momentum (20-30% YoY during Dec ’25-Feb ’26), led by the >Rs0.1mn segment and the <Rs0.1mn market volume showing signs of bottoming; stepup in ICE-2Ws has not slowed the E-2W industry. 2) EL platform (traditional design; targets the Rs0.1-0.13mn segment, which is the belly of the market with 50% share) to meaningfully expand Ather's TAM, margins (huge mechanical cost savings while retaining quality/software), and market share (especially in non-South markets); cannibalization is welcome, given EL’s superior cost structure/margin. 3) AURIC (42k units/mth capacity) to be fully operational before FY27-end; margin benefits to accrue in ensuing quarters; high-volume variants to be launched once plant stabilizes. 4) E-2W industry could see price hike from Apr-25 (Rs5k/unit), on PM E-Drive scheme expiry in Mar-26; ongoing geopolitical tension may cause a temporary 300-400bps hit; OEMs may raise price/absorb impact (based on longevity).

Outlook

We expect strong volume ramp-up at Ather (led by EL) and believe it can achieve EBITDA/PAT breakeven in H2FY27. We retain BUY/TP of Rs1,000, at 7x EV/S (like EIM’s implied valuation of 7.5x EV/S for RE over the 2013-17 high-growth phase; 10x peak valuation).

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Ather Energy - 1703026 - emkayAther Energy - 1703026 - emkay