Ather Energy Limited — Q2 FY26 earnings call

Call held 11 Nov 2025

Management summary

Ather Energy reported a strong Q2 FY26, driven by robust volume growth, significant market share expansion across key regions, and improved profitability metrics. Despite one-time supply chain challenges and a plant delay, the company saw record income and reduced EBITDA losses, supported by strategic distribution expansion and new product introductions like the EL platform and BaaS.

Highlights

  • Units sold were up 67% year-on-year at 66,000 units, and 42% quarter-on-quarter.

  • Total income reached its highest ever at INR940 crores, up 57% year-on-year.

  • Adjusted gross margin on a percentage basis was 22%, a 300 bps improvement year-on-year.

  • Overall EBITDA came in at lower than negative 10%, marking the first time single-digit EBITDA losses, with an 1,100 bps improvement year-on-year and a strong 600 bps improvement quarter-on-quarter.

  • Pan-India market share reached 17.4%, with Middle India market share growing to 14.5% (from 4% in Q1 2025) and South India achieving 25% market share, becoming number one in all South zone.

Concerns

  • A one-time impact from a rare earth supply crunch in Q2 led to the company not filing for subsidy for the majority of vehicles, resulting in an associated reduction in revenue and AGM.

  • The rare earth hit was almost about INR20-25 crores overall, impacting EBITDA.

  • The new plant experienced a 2-3 month delay due to environment clearances, though management expects no volume impact due to alternative production plans.

Key financials

  1. Total Income ₹940 Cr +57%YoY
  2. Units Sold 66,000 units +67%YoY
  3. Adjusted Gross Margin 22% +3%YoY
  4. EBITDA Margin -10% +11%YoY
  5. Pan-India Market Share 17.4%

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.

Guidance & targets

Distribution

  • Total Store Count Distribution · later this year · High confidence nearly 700 stores
    We added 78 stores, taking our total store count to 524, and keeping us on a strong path for our ambition of nearly 700 stores later this year.

    — Tarun Mehta

Product Launch

  • EL Platform Launch Product Launch · next year · High confidence launch next year
    EL is going to bring to the market Ather's first 14-inch wheel in scooters.

    — Tarun Mehta

Product Rollout

  • AtherStack 7.0 Rollout Product Rollout · next few months · High confidence going live over the next few months
    Ather Stack 7.0, which is going live over the next few months.

    — Tarun Mehta

Industry Growth

  • Electric Scooter Growth Multiplier vs 2W Industry Industry Growth · next year · High confidence 4x to 5x faster
    And within scooters, I believe electric scooters will grow at 2x to 2.5x the growth of the overall scooter market. So that would be a compounding multiplier. So this would be about 4x to 5x faster than the overall two wheeler industry.

    — Tarun Mehta

What to watch in Q3 FY26

EL Platform Launch & Cost Structure Impact

next year
Current Unveiled, scheduled for launch next year
Target Progress on launch timeline and initial cost structure benefits

Why it matters

The EL platform is expected to be a step-change in cost structures and a driver of future growth and gross margin improvement.

EL is a more versatile scooter platform with focus -- with a big focus on safety and convenience. And from an operations perspective, this is designed for scalability and a better cost structure compared to 450 and Rizta today. ... Obviously, EL is a step change in our cost structures, and there will be a much stronger improvement of gross margin.

Risks & concerns

  • Rare earth supply crunch and subsidy impact

    medium

    A one-time rare earth supply crunch in Q2 led to INR20-25 crores impact on EBITDA and non-filing of subsidy for majority of vehicles.

    There was a one-time impact because of the rare earth supply crunch in Q2, wherein we had to change our supply chain and because of which the majority of vehicles in Q2 we have not filed for subsidy. ... The rare earth hit was almost about INR20-25 crores overall.

    Management acknowledged

  • Delay in new manufacturing plant commissioning

    low

    The new plant experienced a 2-3 month delay due to environment clearances, but management has a plan to commence EL production from Hosur to avoid volume impact.

    On the new plant, there was, I think, a two, three-month delay because of the delay in obtaining environment clearances, but that's behind us. Work has begun in full swing. To ensure that EL does not struggle because of the delay of the new plant, we have a plan of commencing EL production out of Hosur itself as an early measure to protect EL timelines.

    Management acknowledged

  • April subsidy removal

    low

    Management believes the business is well-prepared to absorb the impact of the April subsidy removal, as Q2 was already a limited subsidy quarter.

    So, for me, the April subsidy removal is probably no longer a big call-out or a big concern. I think our business is very well set up to absorb that.

    Management downplayed

Q&A highlights

7 direct
Impact of network expansion on ASPs and store maturity Direct
our ASPs have been extremely steady. I think the customer landed price, ex-showroom average of vehicle plus pro pack, is probably within a few hundred rupees over the last several quarters now. ... So the first growth that we see typically within six, eight months is ASPs for the store growing up. This is followed by Pro Pack - sorry, the first growth that we see is actually Pro Pack attached rate going up.

Management clarified that despite rapid network expansion into new regions, ASPs have remained steady, and new stores quickly mature in terms of Pro Pack attached rates, indicating strong product acceptance.

Asked by Kapil Singh

Cost reduction strategies and impact of EL platform Direct
I think overall underlying gross margins have improved by 100-150 bps this quarter, accounting for subsidy. I think part of that has been the increasing attach – share of business of LFP batteries, but also constant cost reduction by R&D. ... Obviously, EL is a step change in our cost structures, and there will be a much stronger improvement of gross margin.

Management detailed the drivers of gross margin improvement, including LFP adoption and R&D efforts, and highlighted the EL platform as a significant future step-change for cost structures.

Asked by Kapil Singh

Festive season demand, plant delay, and capacity outlook Direct
festive was very strong. Honestly, we are all scrambling around to ensure that we can keep raising the capacity, particularly on the supplier ends. ... On the new plant, there was, I think, a two, three-month delay because of the delay in obtaining environment clearances, but that's behind us. Work has begun in full swing. To ensure that EL does not struggle because of the delay of the new plant, we have a plan of commencing EL production out of Hosur itself as an early measure to protect EL timelines.

Management confirmed strong festive demand leading to stock-outs and outlined plans to mitigate the new plant delay to ensure EL production timelines are met, indicating confidence in future supply.

Asked by Chirag Jain

Gross margin trajectory and impact of subsidy removal Direct
on the revenue front, we expect as stores stabilize for our ASPs to hold up well, maybe even a minor improvement in some geos. We expect our accessory attach rates to continue improving. ... So, for me, the April subsidy removal is probably no longer a big call-out or a big concern. I think our business is very well set up to absorb that.

Management expressed confidence in maintaining ASPs and improving accessory attach rates, stating that the upcoming April subsidy removal is not a major concern due to the business's preparedness.

Asked by Vipul Agrawal

Effectiveness of Battery as a Service (BaaS) and buyback programs Direct
BaaS and buyback is largely a top of the funnel activation for us. ... Their attached rates are low. I would say they are like low single digits. But that is not their primary agenda. They are there in our portfolio to give comfort to customers. Hopefully, the attached rates will go up. But I think they played the role that they were intended to.

Management clarified that BaaS and buyback programs are primarily for customer comfort and top-of-funnel activation, rather than high attach rates, indicating a strategic approach to market penetration.

Asked by Vipul Agrawal

Overall industry growth outlook and EV multiplier for the next year Direct
I am in the near term, that's the next couple of quarters, very bullish on industry growth. ... Scooters grow at twice the pace of the two wheeler industry. ... electric scooters will grow at 2x to 2.5x the growth of the overall scooter market. So that would be a compounding multiplier. So this would be about 4x to 5x faster than the overall two wheeler industry.

Management provided a strong bullish outlook for industry growth in the near term, particularly for electric scooters, projecting a significant multiplier effect compared to the overall two-wheeler market.

Asked by Pramod Kumar

Role of LFP batteries in profitability and supply chain de-risking Direct
LFP has supported our profitability, has supported our margins. ... It also allows us to ensure that we have both technologies coming often from two different geographies, multiple vendors in our mix. So we are better prepared for what seems to be an increasingly very volatile world.

Management highlighted LFP batteries not only for their contribution to margins but also as a critical component in de-risking the supply chain by diversifying technology, partners, and geographies.

Asked by Gunjan Prithyani

3 min read 6 chapters

Detailed narrative

Robust Q2 FY26 Financial and Operational Performance

Ather Energy delivered a strong Q2 FY26, with units sold reaching 66,000, representing a 67% year-on-year and 42% quarter-on-quarter growth. Total income hit a record INR940 crores, up 57% year-on-year. The adjusted gross margin improved by 300 basis points year-on-year to 22%, or 21% without incentives. EBITDA losses were significantly reduced to less than 10%, marking an 1,100 bps year-on-year and 600 bps quarter-on-quarter improvement, despite a one-time INR20-25 crores impact from rare earth supply chain issues.

Significant Market Share Expansion and Distribution Growth

The company achieved its strongest market share gain in recent times, reaching 17.4% Pan-India in Q2. Strategic focus on Middle India (Chhattisgarh, Gujarat, Maharashtra, Madhya Pradesh, Odisha) resulted in market share growth to 14.5% in the region. In South India, Ather achieved 25% market share, becoming number one in the zone, and in October, became number one in every single state in the South. The distribution network expanded with 78 new stores added in Q2, bringing the total to 524, with an ambition to reach nearly 700 stores by year-end.

Innovation in Product Portfolio and Technology

Ather filled a portfolio gap by introducing low-range models on 450S and Rizta S, each offering 160 km range. The company launched 'Battery as a Service' (BaaS) to reduce the upfront price of Rizta S to INR76,000, and unveiled its new generation EL platform, designed for scalability and better cost structure, scheduled for launch next year. Key technological advancements include a 2x faster new generation fast charger, AtherStack 7.0 software (with features like pothole alerts and crash alerts), and the Ather Charge Drive Controller (AC/DC) for onboard charging and cost reduction. The attach rate for AtherStack reached 89%, contributing 12% to non-vehicle revenue.

Cost Structure Optimization and Profitability Drivers

Underlying gross margins improved by 100-150 basis points, driven by an increasing share of LFP batteries and continuous R&D-led cost reductions. Management expects this trend to continue, with the EL platform anticipated to bring a significant step-change in cost structures and gross margin improvement. The company maintains a lean P&L, avoiding additional costs from own stores, insurance, logistics, or excessive vertical integration, which contributes to a better payoff at EBITDA and PAT levels.

Bullish Industry Outlook and EV Penetration

Management expressed a very bullish outlook for industry growth in the near term, particularly in states like Madhya Pradesh, Punjab, Bihar, and Kerala. They project electric scooters to grow 2x to 2.5x faster than the overall scooter market, leading to a compounding multiplier of 4x to 5x faster than the overall two-wheeler industry. Despite a recent GST change and rare earth crisis, underlying demand remains strong, and the business is prepared to absorb the April subsidy removal, which is no longer considered a major concern.

Sales Strategy Focused on Product Value and Non-Discounting

Ather has maintained extremely steady ASPs despite rapid network expansion, with customer landed prices (vehicle plus Pro Pack) remaining consistent. Pro Pack attach rates quickly mature in new geographies, reaching 70-75%, and accessory attach rates are also growing in mature markets (e.g., 60-75% in Gujarat). The company emphasizes a disciplined, non-discounting approach, believing that low-price products and heavy discounting do not attract the right customer and negatively impact resale values, a stance that management feels is being validated by the industry.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Automobile and Auto Components earnings calls