Ather Energy

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).

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.

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%.

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.

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.

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.

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 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.'