Ather Energy shares zoom 18% after Q1 results. Why is it Nomura's top 2-wheeler pick?

Shares of Ather Energy climbed 18% to Rs 1,500 on the BSE on Tuesday after the electric two-wheeler maker's June-quarter loss narrowed to Rs 51 crore from Rs 178 crore a year earlier, signalling improving operating performance.

Revenue from operations soared 88.8% year on year to Rs 1,217 crore. The company's consolidated total income rose 87.2% to Rs 1,260 crore, supported by robust volume growth, calibrated pricing actions and a higher contribution from non-vehicle revenue.

Revenue from software subscriptions, charging, accessories, spares and service accounted for 14% of revenue, up from 13% in the corresponding quarter last year. Consolidated EBITDA turned positive at Rs 9 crore during the quarter, against an EBITDA loss of Rs 106 crore a year earlier.


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Why is Ather Nomura’s top pick?

Following the results, Nomura maintained its Buy rating on Ather Energy and raised its target price to Rs 1,714 from Rs 1,273, implying a 34.6% upside. The brokerage retained Ather as its top pick in the electric two wheeler segment, saying EV penetration in India has reached an inflection point, with demand continuing to outpace supply. It expects the upcoming EL platform to nearly double the company's total addressable market while significantly lowering costs.

Nomura believes margin risks have largely eased, while improving scale and operating leverage should help Ather achieve EBITDA breakeven by FY28. The brokerage also sees the company's potential entry into the motorcycle segment as a long term growth opportunity. It added that policy measures such as ICE vehicle restrictions or additional EV incentives in more states, along with Ather's inclusion in the PLI scheme, could provide further upside.

Ather Energy Q1 management commentary

Commenting on the performance, Co founder and CEO Tarun Mehta said the company continued to witness strong demand across its portfolio, supported by favourable policy measures and changing customer preferences. He said demand was significantly higher than supply, reinforcing confidence that the market continues to expand. Mehta added that the upcoming product on the EL platform, along with production ramp up at the new AURIC factory, positions Ather well for its next phase of growth.

Read more: Ather Energy - 10 microcap stocks surged up to 170% in 6 months; 5 turned multibaggers

Consolidated adjusted gross margin (AGM) stood at Rs 282 crore, an increase of 82.3% from a year ago. The company said commodity inflation pushed up raw material costs during the quarter, with higher prices of copper, aluminium, lithium and crude linked materials. It added that calibrated pricing actions, an improved product mix, value engineering initiatives and supplier negotiations helped offset cost pressures and support healthy margins.

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