Ather Energy shares rose nearly 5% on Tuesday, 27 October, after the electric two-wheeler maker reported a profit for the September quarter and announced plans to expand its annual production capacity by an additional 2.25 lakh units by Q2 FY28.
The company reported consolidated revenue from operations of ₹1,464.2 crore for the July-September quarter, up 63% from ₹898.9 crore in the corresponding period last year.
Ather Energy posted a consolidated profit after tax (PAT) of ₹1.26 crore in Q2, compared with a loss of ₹154 crore a year earlier. EBITDA stood at ₹74.2 crore, marking its second consecutive quarter of positive EBITDA despite elevated commodity costs, the company said in a press release on Monday.
Vehicle sales rose 44% year-on-year to 93,000 units during the quarter, compared with 66,000 units in the year-ago period. The company reported a 15.1% market share in the electric two-wheeler segment.
Ather Energy shares rallied on Monday after the company returned to profitability in the September quarter.
The stock surged 13.74% to close at ₹1,574 on the BSE after rising as much as 18.78% to an intraday high of ₹1,643.85. On the NSE, shares gained 14.13% to settle at ₹1,575.
Ather Energy plans to expand production capacity
According to an exchange filing, Ather Energy’s board has approved plans to increase annual production capacity at its existing and upcoming facilities.
At its Hosur plant, annual capacity will be raised from 4.20 lakh units to 4.95 lakh units. Meanwhile, the planned capacity at Factory 3.0, which is under construction in Chhatrapati Sambhajinagar, will be increased from 5 lakh units to 6.50 lakh units.
The expansion is expected to take Ather Energy’s total installed annual production capacity to approximately 11.4 lakh units by Q2 FY28.
The company has earmarked ₹122 crore for the expansion, including ₹58 crore for the Hosur facility and up to ₹64 crore for Factory 3.0. The investments will be funded through a combination of debt and internal accruals.
Ather said capacity utilisation at the Hosur facility had reached 98% during peak production. Factory 3.0 is still under construction.
The capital expenditure at Hosur includes ₹53 crore for a new battery line, which the company said would help meet demand and reduce supply chain risks.
Should you buy?
Emkay Global Financial Services retained its ‘Buy’ rating on Ather Energy and raised its target price by around 2% to ₹2,250 from its previous estimate, while lowering its valuation multiple to 6x from 7x based on September 2028 estimates.
The brokerage said it remains positive on the electric two-wheeler (E-2W) theme through Ather Energy, citing the company’s established brand, product portfolio, robust gross margins and the potential to scale up its EL platform.
Emkay revised its estimates to factor in higher average selling prices (ASPs), improved margins and a ramp-up in volumes. It raised its earnings per share (EPS) estimates for FY27, FY28 and FY29 by approximately 1%, 28% and 31%, respectively. The brokerage said its valuation approach reflects expectations of higher capacity, increased volumes and Ather’s established brand.
Strong Q2 performance beats estimates
Ather Energy reported a robust performance in the September quarter, with revenue rising 63% year-on-year, around 7% above Emkay’s and Street estimates. Growth was driven by a 42% year-on-year increase in volumes and an approximately 15% quarter-on-quarter rise in ASPs.
EBITDA margin turned positive at 0.8%, beating Emkay’s estimate of -3.8% and improving from -2.7% in the June quarter. The improvement came despite commodity cost pressures that weighed on gross margin by around 9.4%, supported by calibrated price hikes, structural cost savings of approximately 5.3% and a favourable product mix.
The brokerage noted that demand remained strong during the quarter, with pre-orders and enquiries for Ather rising 108% and 109% year-on-year, respectively. It sees further growth potential, supported by an unrealised retail opportunity of 18,000–20,000 units per month.
Technical Views
Ather Energy share price opened at an intraday low of ₹1,600 apiece on the BSE, the stock touched an intraday high of ₹1,658.50 per share.
Ruchit Jain, Head of Equity Technical Research at Motilal Oswal Financial Services, said Ather Energy remains in a broader uptrend and has seen renewed buying interest following the announcement of its quarterly results. He identified support at ₹1,480, around the 20-day exponential moving average (DEMA), while ₹1,350, the recent swing low, remains a crucial support level.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
