Target: ₹925
CMP: ₹629.05
Ather Energy reported a strong Q2 (in line with our estimate), with revenue up 54 per cent y-o-y to ₹890 crore led by 67 per cent y-o-y/42 per cent q-o-q volume rise, while EBITDA loss narrowed to ₹130 crore (EBITDAM at –14.7 per cent vs –21 per cent in Q1/-24 per cent in Q2FY25) aided by better scale/cost optimisation.
Gross margin (GM; ex-incentive) improved to 17.3 per cent (16.5 per cent in Q1; 10 per cent in FY25), reflecting benefits from the LFP transition and operating leverage.
Despite near-term supply issues and AURIC’s slight delay by 2-3M (regulatory-based), the EL platform launch is on track via existing Hosur plant. We believe Ather’s premium positioning, high margin non-vehicle revenue (12 per cent), and upcoming EL platform (mass e-2W) are added levers to play India’s e-2W shift (refer to our thematic: Yet another mega shift in motion; Ather – the Frontrunner), with potential to deliver 10x return in 10Y.
We keep estimates/TP largely unchanged; retain Buy at ₹925 TP (7x Sep-27E EV/S, like EIM’s implied valuation of 7.5x EV/S for Royal Enfield during the 2013-2017 high growth phase; 10x peak valuation).