Ather Energy Limited — Q4 FY25 earnings call

Call held 12 May 2025

Management summary

Ather Energy reported a strong Q4 and full year FY25, driven by significant volume growth of 42% YoY to 155,000 units and a 29% YoY increase in total income to INR 2,305 crores. Profitability saw substantial improvement, with adjusted gross margin up 1,000 bps to 19% and EBITDA improving by 1,300 bps to minus 23%. The company expanded its distribution network, reduced COGS per unit by 19%, and saw strong adoption of its software offerings, though Q4 expenses were elevated due to new product launches.

Highlights

  • FY25 volume reached 155,000 units, marking a 42% year-on-year growth.

  • Total income for FY25 stood at INR 2,305 crores, reflecting a 29% year-on-year increase.

  • Adjusted gross margin for FY25 was INR 428 crores, up 172% YoY, with the margin improving by 1,000 bps from 9% to 19%.

  • EBITDA for FY25 improved by 1,300 bps, reaching minus 23% compared to minus 36% in FY24.

  • COGS per unit saw a strong 19% reduction in FY25, from 148,900 to 120,700.

Concerns

  • Q4 other expenses were 'quite high' due to the Rizta launch sales/marketing push and provisions for retail stock/subsidy transition.

  • Cannibalization of the 450 performance scooter by the new Rizta family scooter was observed, though it was within internal estimates.

Key financials

2 periods

Q4 FY25

  • Units Sold
    47,400 units
    YoY +35%
  • Total Income
    ₹687 Cr
    YoY +28%
  • EBITDA %
    -23%

FY25

  • Units Sold
    1,55,000 units
    YoY +42%
  • Total Income
    ₹2,305 Cr
    YoY +29%
  • Adjusted Gross Margin
    ₹428 Cr
    YoY +172%
  • Adjusted Gross Margin %
    19%
  • EBITDA %
    -23%
  • COGS per unit
    ₹1,20,700
    YoY -19%

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.

Capital allocation

medium confidence
  • Capex Capex disclosed
    • New greenfield factory in Chhatrapati Sambhaji Nagar for additional capacity and new platform requirements
    The Chhatrapati Sambhaji Nagar capacity, which is greenfield capacity, should help with further volume expansion next year. And particularly for the new platforms that we have in mind, particularly the EL platform, where we are looking at a few different processes. So between additional capacity due next year, and the new platform requirements, which are also due shortly, Chhatrapati Sambhaji Nagar plays that role for us.

Guidance & targets

Industry Growth

  • EV Industry Growth Industry Growth · FY26 · Low confidence very strong
    I believe for the industry FY26 can be a very strong one.

    — Tarun Mehta

EV Adoption

  • EV Adoption Growth EV Adoption · FY26 compared to FY25 · Low confidence stronger growth
    I believe EV adoption for this year will be strong. I believe growth should be stronger in FY '26 compared to '25.

    — Tarun Mehta

Cost Reduction

  • LFP Battery Cost Advantage Cost Reduction · coming year · Medium confidence 15%-20% cheaper
    LFP generally tends to be 15%-20% cheaper compared to NMC globally, most reports will call it out. And that looks like a dependable number in the coming year.

    — Tarun Mehta

Capacity

  • Chhatrapati Sambhaji Nagar Factory Commissioning Capacity · sometime next year · Medium confidence starting to come on life
    Sometime next year, you should see it starting to come on life, but exact timeline we'll share a little later.

    — Tarun Mehta

Local Sourcing

  • Indian Produced Cells Availability Local Sourcing · a couple of years, maybe a few years · Low confidence get there
    I would still guide a couple of years, maybe a few years to get there.

    — Tarun Mehta

Distribution

  • New Store Breakeven Timeline Distribution · next few quarters · Medium confidence a few quarters now
    Today the new format stores that we open breakeven at a much smaller timeline. They are down from taking several years to get to steady state and years to profitability to literally down to a few quarters now.

    — Tarun Mehta

What to watch in Q1 FY26

Chhatrapati Sambhaji Nagar Factory Commissioning

sometime next year (FY26)
Current Under construction
Target Starting to come on life

Why it matters

This new greenfield facility is crucial for future volume expansion and improved unit economics.

Sometime next year, you should see it starting to come on life, but exact timeline we'll share a little later.

Risks & concerns

  • Impact of subsidy reduction on demand

    medium

    Subsidy reduced from INR 10,000 to INR 5,000, a 3% impact on revenue, which Ather can absorb due to cost reduction; market is becoming independent of subsidy.

    Analyst downplayed

  • Cannibalization of 450 models by Rizta

    low

    Cannibalization was expected and within internal estimates, as many customers previously bought 450 due to lack of choice; 450 is now being positioned more sharply.

    Analyst acknowledged

  • Supply chain resilience for NMC batteries

    low

    NMC batteries involve nickel, manganese, and cobalt, making them a 'dangerous combo from a supply chain perspective'; LFP offers better resilience.

    Management acknowledged

Q&A highlights

8 direct
Growth outlook for EV industry and Ather (product cycle, network expansion) Direct
I believe for the industry FY26 can be a very strong one. The overall distribution for the industry is higher as we speak in FY26 compared to FY25. Given the work done by many of our peers over the last one year. So, I believe that will help overall industry volumes.

Provides management's macro outlook and key growth drivers (Rizta, EL platform, distribution) for Ather.

Asked by Kapil Singh

Profitability and cost levers, Q4 other expenses Direct
EL platform is a very strong lever with the lower cost architecture that it has. That's shaping up very well and I'm very bullish about it. We've also talked publicly about our transition to LFP battery packs, which is underway as we speak, and homologation is already achieved for it. So, LFP battery packs are obviously generally cheaper than NMC battery packs.

Details the specific initiatives (EL platform, LFP batteries, new factory, operating leverage) that will drive future margin improvement and explains Q4 expense spikes.

Asked by Kapil Singh

Impact of subsidy reduction on EV adoption and customer profile Direct
what's happened this time is, while there was a bit of a jump and a drop, it was materially lower. While March was strong, April was not as weak at all, unlike last year. And this is basically because the impact of subsidy reduction was just not strong enough.

Clarifies the limited impact of the recent subsidy reduction compared to previous instances, suggesting the market is maturing beyond subsidy dependence.

Asked by Gunjan

LFP battery transition and cost advantage Direct
LFP generally tends to be 15%-20% cheaper compared to NMC globally, most reports will call it out. And that looks like a dependable number in the coming year. Also, the big advantage of LFP is it's a more supply chain resilient chemistry.

Provides a quantifiable cost benefit and strategic advantage of the LFP battery transition.

Asked by Gunjan

Market share trends in non-South markets and brand acceptance Direct
Particularly strong response for us has been, like the one example that I definitely will call out is Gujarat, where Ather continuously used to be single digit market share, often 4%-5%. But in recent quarters, we have hit 20% market share.

Highlights successful expansion into non-South markets, driven by Rizta, indicating broader market acceptance and growth potential.

Asked by Jay Kale

Resale value of products and competitive advantage Direct
We have been miserably failing there. We have not been able to convince these customers even at INR75,000 to give over their vehicles. So, sorry, just a small joke. But yes, that's how things have trended. So we feel very good about our resale price.

Management's anecdotal evidence suggests strong resale value, which is a key barrier for EV adoption and a competitive differentiator.

Asked by Jay Kale

Performance scooter (450) sales post-Rizta launch Direct
performance scooters, we have seen some cannibilization for 450 after the introduction of Rizta. Frankly, it's not very different from what we internally estimated. And the reason is simple. We knew colloquially that a lot of customers in many cities were buying an Ather 450 in the past, not because they were necessarily looking for a performance scooter, but for the most part because they wanted to buy an Ather and Ather only had one product.

Addresses concerns about cannibalization and clarifies that it was expected, with a strategy to position 450 more sharply in the performance segment.

Asked by Nikhil

Employee benefit expenses in Q4 FY25 Direct
I believe there were a few stock options that particularly vested in that time period that caused a change.

Explains a significant one-time reduction in employee benefit expenses, clarifying a potential modeling anomaly.

Asked by Nikhil

3 min read 8 chapters

Detailed narrative

Q4 FY25 and Full Year Performance Overview

Ather Energy delivered a strong Q4 and FY25. For the full year, units sold reached 155,000, a 42% YoY growth, with total income at INR 2,305 crores, up 29% YoY. Adjusted gross margin significantly improved by 1,000 bps to 19%, leading to a 172% YoY increase in absolute gross margin to INR 428 crores. EBITDA improved by 1,300 bps to minus 23% for FY25. Q4 FY25 also saw robust growth, with 47,400 units sold (up 35% YoY) and total income of INR 687 crores (up 28% YoY), with EBITDA at minus 23% (1,900 bps improvement YoY).

Product Launches and COGS Reduction

FY25 was pivotal with the launch of seven products across two lines, including the new family scooter Rizta, which significantly lowered entry price points from 130k to 109k. The company also introduced the Ather Halo smart helmet line and Ather Stack 6 software. A key highlight was a 19% reduction in COGS per unit in FY25, from 148,900 to 120,700, driven by the introduction of Rizta, cooling lithium-ion cell prices, and R&D efforts which have achieved a 31% cost reduction over 3-3.5 years.

Distribution Expansion and Market Share Growth

Ather expanded its distribution network by adding 143 stores in FY25, bringing the total to 351, and installed 1,128 new fast chargers, totaling 3,611. This expansion contributed to a significant increase in Pan India market share, from 7.4% in Q1 to 13.3% in Q4 (Vahan database). In South India, Ather became the number one player in Q4 with a 22.4% market share, and non-South markets like Gujarat saw market share jump from 4-5% to 20%.

Software Adoption and Premiumization Strategy

The company's software attach rate reached 88% for FY25 sales, up from 84-85% in FY24, contributing over 600 bps to revenue. This strong consumer reception for software, even with the mass-market Rizta, underscores Ather's premiumization strategy. Management emphasized that the focus on upgrading Indian customers with technology, coupled with the ecosystem strategy and strong gross margins, has yielded positive results.

Subsidy Impact and EV Adoption Outlook

The recent reduction in subsidy from INR 10,000 to INR 5,000 had a 'materially lower' impact on demand compared to previous instances, with April 2025 not as weak as April 2024. Management believes the industry is increasingly becoming independent of subsidy, and pricing is less affected. They are bullish on EV adoption for FY26, expecting stronger growth than FY25, as the industry addresses barriers like battery life, warranties, and charging anxiety.

Future Growth Levers: EL Platform and LFP Batteries

Ather is aggressively working on its EL (Entry Level) product line, a low-cost scooter platform, which is expected to unlock a strong market in the mid-term. The transition to LFP battery packs is underway, with homologation achieved. LFP batteries are generally 15-20% cheaper than NMC globally and offer better supply chain resilience, which will be a significant lever for unit economics and profitability in the coming year.

New Manufacturing Facility and Local Sourcing

The new greenfield factory in Chhatrapati Sambhaji Nagar is expected to 'come on life sometime next year,' providing additional capacity and supporting new platform requirements. Ather views local sourcing of cells as a strategic imperative, with MOUs already in place (e.g., Amara Raja) and relationships with LG. Management anticipates Indian-produced cells to be available within 'a couple of years, maybe a few years,' aiming to be an early adopter.

Employee Benefit Expenses

Employee benefit expenses in Q4 FY25 were INR 109 crores, a sharp reduction from INR 154 crores in the previous year. This change was attributed to 'a few stock options that particularly vested in that time period.'

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