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.