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    Ather Energy Limited

    ATHERENERG
    Automobile and Auto Components·4 Aug 2025
    Management Summary

    Ather Energy delivered a strong Q1 FY26, marked by significant volume and revenue growth, alongside substantial margin expansion. The company expanded its market share, particularly dominating South India, and rapidly grew its distribution network. While EBITDA remains negative, it showed considerable improvement, and management is actively navigating supply chain challenges and preparing for future product launches.

    Highlights

    5

    • Units sold were 46,000, an increase of almost 100% over the same quarter last year, demonstrating strong volume growth.

    • Total income reached INR 672 crores, marking an 83% year-on-year increase.

    • Adjusted gross margins hit 23% (INR 154 crores), a 117% year-on-year improvement, with margins without government incentives at about 20% (700 bps improvement YoY).

    • Market share grew to 14.3% from 7.6% in Q1 FY25, and 13.6% in Q4 FY25, indicating strong competitive performance.

    • Non-vehicle revenues now contribute 12% to total revenue, driven by accessories, warranty programs, and software, with an 89% software attach rate.

    Concerns

    2

    • EBITDA remained negative at -16%, although it improved by 1700 bps over the same quarter last year.

    • A potential business impact of about a week in Q2 is anticipated due to the rare earth magnets crisis, though management expects it to be restricted to Q2.

    What Changed2

    vs Q2 FY26

    Guidance items4 → 7 (+3)Risks discussed3 → 1 (-2)

    Key financials

    Single quarter

    06 metrics
    1. 01Units Sold46,000 units+99.9%YoY
    2. 02Total Income₹672 Cr+83%YoY
    3. 03Adjusted Gross Margins₹154 Cr+117%YoY
    4. 04Adjusted Gross Margin %23%
    5. 05EBITDA Margin-16%

    Segment breakdown

    South India
    22.8% Market Share
    Middle India
    10.7% Market Share
    List

    Capital allocation

    1
    medium confidence
    CategoryHeadline
    Capex

    Capex disclosed

    Guidance & targets

    7
    CategoryTargetPriority
    Volume
    Growth in Middle India
    a fair bit of growth
    		Low
    Network Expansion
    Results from Rest of India expansion
    strong results
    		Low
    Product Launch
    EL Platform product launch action
    some good action
    		Medium
    Product Launch
    Motorcycle announcement
    definitely not this year
    		High
    Supply Chain
    Impact of rare earth magnets
    restricted to Q2
    		High
    Operating Costs
    Operational teams wage bill increase
    continue increasing
    		Medium
    Non-Vehicle Revenue
    Non-vehicle revenue trend
    trend higher and higher
    		Medium

    What to watch in Q2 FY26

    5

    Rare Earth Magnets Impact

    Next quarter (Q2 FY26)
    CurrentPotential business impact of about a week in Q2
    TargetImpact restricted to Q2, no spillover

    Why it matters

    To assess supply chain stability and cost implications, and verify management's optimism.

    As of now, I am optimistic that any impact of rare earth magnets would be restricted to Q2.

    Risks & concerns

    1
    RiskSeverity

    Rare earth magnets crisis

    Potential business impact of about a week in Q2 due to the crisis, but management is optimistic it will be restricted to Q2. — Management acknowledged

    medium

    Q&A highlights

    8

    “So, it's actually a combination of our value engineering work, favourable commodities, also the strength of the brand. We've been able to calibrate prices upwards and ensure good attach rates of software.”

    Clarifies the multiple factors contributing to gross margin improvement despite reduced government incentives.

    asked by Nishit Jalan

    2 min read6 chapters

    Detailed Narrative

    01

    Strong Q1 FY26 Financial Performance

    Ather Energy reported a robust Q1 FY26, with units sold reaching 46,000, an increase of almost 100% year-on-year. Total income grew by 83% to INR 672 crores compared to the same quarter last year. Adjusted gross margins significantly improved to 23%, translating to INR 154 crores, up 117% year-on-year. While EBITDA remained negative at -16%, this represented a substantial 1700 basis points improvement over Q1 FY25.

    02

    Market Share Expansion and Regional Dominance

    The company's market share expanded to 14.3% in Q1 FY26, up from 7.6% in Q1 FY25 and 13.6% in Q4 FY25. Ather achieved market leadership in South India, becoming the number one player by volume with a 22.8% market share, driven by the popularity of the Rizta model. In Middle India, market share reached 10.7%, an almost 2.5x increase over the previous year, primarily due to aggressive distribution expansion.

    03

    Strategic Focus on Premiumization and R&D

    Ather Energy continues to prioritize premiumization within the two-wheeler industry, targeting upgrading Indian buyers. The company maintains a strong focus on R&D and technology, evidenced by 417 patents filed, with 60-70 new patents in Q1 FY26 alone. This investment in R&D is crucial for navigating the future of the EV sector and ensuring product performance, even amidst supply chain challenges🌐.

    04

    Distribution Network and Non-Vehicle Revenue Growth

    The company significantly expanded its distribution network, adding 95 new stores in Q1 FY26, bringing the total to 446 stores across the country. This expansion is particularly impactful in Middle India. Non-vehicle revenues, including accessories, warranty programs, and software, now contribute 12% to total revenue, with a high software attach rate of 89%. Ather also added almost 400 charging points, reaching a total of 4,000 nationwide.

    05

    Upcoming Products and Manufacturing Expansion

    Ather is set to unveil its new EL platform, designed for cost and scalability, later this month, with products expected to launch next year. The company has also integrated LFP battery packs, with their financial impact expected to be visible in Q2 and Q3 FY26 sales contributions. Progress on Factory 3.0 in Aurangabad, a major capex outlay for next year's expansion, is on track, with announcements expected in the coming quarters⏳ and go-live targeted for next year.

    06

    Addressing Supply Chain and Market Dynamics

    Management is actively navigating the rare earth magnets crisis, exploring various solutions to ensure supply chain stability, and expects any business impact to be restricted to Q2. The company acknowledges the shift in EV market dynamics towards early majority customers and is focusing its communication on providing assurance regarding battery life, safety, service, and resale value to convert a broader customer base.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.