Ather Energy Limited — Q1 FY26 earnings call

Call held 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

  • 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

  • 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.

Key financials

  1. Units Sold 46,000 units +99.9%YoY
  2. Total Income ₹672 Cr +83%YoY
  3. Adjusted Gross Margins ₹154 Cr +117%YoY
  4. Adjusted Gross Margin % 23%
  5. EBITDA Margin -16%
  6. Market Share 14.3%

What they filed

Q1 FY27: revenue up 88.7%, net profit up 71.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue584 635 676 645 899 +54%954 +50%1,175 +74%1,217 +89%
EBITDA-139 -141 -172 -134 -132 +5%-72 +49%-70 +59%-33 +75%
Net profit-197 -198 -234 -178 -154 +22%-85 +57%-100 +57%-51 +71%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

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

Capital allocation

medium confidence
  • Capex Capex disclosed
    • Factory 3.0 in Aurangabad, Chhatrapati Sambhajinagar
    • Capacity expansion and R&D
    The big capex outlay for us compared to last year would obviously be Factory 3.0 in Aurangabad, Chhatrapati Sambhajinagar. Outside of that, I expect our capex would be quite similar to our capex last year, given that last year we had some pending payments coming from Rizta and capacity expansion continually happening for Rizta. While this year, there is some capacity expansion and a fair bit of R&D. So, I think that part of capex might be quite comparable, plus whatever will come due for Factory 3.0.

Guidance & targets

Volume

  • Growth in Middle India Volume · this year · Low confidence a fair bit of growth
    So, this year, a fair bit of growth will continue coming from the Middle India geography.

    — Tarun Mehta

Network Expansion

  • Results from Rest of India expansion Network Expansion · next year · Low confidence strong results
    And rest of India, where we are now moving our attention and in the ensuing quarters, you will see specifically next year, you should hopefully see strong results from this cohort also.

    — Tarun Mehta

Product Launch

  • EL Platform product launch action Product Launch · next year · Medium confidence some good action
    But I think next year we should see some good action.

    — Tarun Mehta

  • Motorcycle announcement Product Launch · this year · High confidence definitely not this year
    So expect the motorcycle announcement to be definitely not this year.

    — Tarun Mehta

Supply Chain

  • Impact of rare earth magnets Supply Chain · Q2 · High confidence restricted to Q2
    As of now, I am optimistic that any impact of rare earth magnets would be restricted to Q2.

    — Tarun Mehta

Operating Costs

  • Operational teams wage bill increase Operating Costs · next few years · Medium confidence continue increasing
    So, Kapil, I expect the operational teams, the wage bill to continue increasing for some time on the operational team front, which is our manufacturing and our sales and service, HO teams. I believe that there, I expect their cost to continue increasing for the next actually few years.

    — Tarun Mehta

Non-Vehicle Revenue

  • Non-vehicle revenue trend Non-Vehicle Revenue · ongoing · Medium confidence trend higher and higher
    Yes, so non-vehicle revenue, honestly, definitely will hopefully trend higher and higher because service revenues will keep increasing with a higher base of installed vehicles in the field.

    — Tarun Mehta

What to watch in Q2 FY26

Rare Earth Magnets Impact

Next quarter (Q2 FY26)
Current Potential business impact of about a week in Q2
Target Impact 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

  • Rare earth magnets crisis

    medium

    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

Q&A highlights

7 direct
Cost reduction drivers and future outlook Direct
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

Impact of rare earth magnet issues Direct
So, when I say 7 days of impact, that's factoring all of that in. So, the right way to see this would be not like production stopped for 7 days, but a possible gap in our ability to supply our dealers demand for up to about a week for this entire quarter.

Provides clarity on the nature and expected duration of the supply chain disruption, indicating a limited retail impact.

Asked by Nishit Jalan

EL platform launch timeline and target markets Partial
So, we'll be unveiling the platform this month and later this month. Pardon me, I will not be able to share timelines on the product today. But I think next year we should see some good action.

Confirms the platform unveiling soon and product launches next year, but lacks specific dates or detailed market strategy.

Asked by Nishit Jalan

Difference between SIAM and company reported sales numbers Direct
The financial numbers that you see are wholesale numbers. So, that is what has been dispatched to dealers and received by them. I think there could be a difference because of transit in case of SIAM.

Explains the discrepancy between public (SIAM) and internal (wholesale) sales figures, attributing it to transit gaps.

Asked by Nishit Jalan

Handling of rare earth magnet crisis and cost/performance impact Direct
I'm more optimistic about moving to rare earth magnets out from heavy rare earth magnets because rare earth magnets don't have an export ban and have a little bit of more supply available globally... The reason we are taking time in engineering is spending a lot of time in R&D is because we are working hard to ensure that there is no impact on the product performance at all.

Details the company's multi-pronged strategy to mitigate the rare earth crisis and assures no performance degradation.

Asked by Kapil Singh

EV demand trends and hurdles for non-converting customers Direct
I think we are now getting into the early majority crowd, which is the 20% to 50%, 20% to 60% kind of market opportunity. And for these customers, I believe the key focus has to now move on to really giving them assurance, really giving them comfort that electric is a very good, safe choice.

Outlines the evolving customer base for EVs and the company's strategy to address their concerns (assurance, safety, service).

Asked by Kapil Singh

Company's investment in local brand building for new showrooms Direct
So, our brand building spend happens at a more central level, where whether it is state-wise campaigns or national campaigns, Ather does invest meaningfully in marketing and I am a believer that a young brand like us is ought to spend in marketing and brand building. But we do not have to spend for getting the infrastructure.

Clarifies the division of responsibilities for brand building and infrastructure costs between Ather and its dealership partners.

Asked by Vishal Goel

Incentives for the new plant in Aurangabad Direct
So, Kapil, we have a significant capital subsidy chunk which will be received against the total capex investment. And from an opex point of view, we have a 2.5% GST uptake that we will receive from the state share, which is all the vehicles which are being sold out of the state.

Details the specific financial incentives and subsidies available for the new manufacturing facility, highlighting long-term benefits.

Asked by Kapil Singh

2 min read 6 chapters

Detailed narrative

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.

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.

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.

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.

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.

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.

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