Ather Energy's stock has surged 270% over the past year, and international brokerage Nomura sees an additional 22.5% upside potential. This optimism is driven by Ather's strategic positioning in the electric vehicle (EV) market, which is at an inflection point, according to Nomura.
Nomura highlights Ather's ability to maintain an 18% market share in FY26, despite being supply constrained. The launch of a new affordable scooter under the EL platform from Q3 FY27, alongside a new plant, is expected to address the Rs 100-125k segment, which constitutes 45% of the industry. Furthermore, the success of a new motorcycle platform could provide additional upside to estimates.
The brokerage has revised its volume estimates for Ather, projecting 399k units (+53% YoY) in FY27 and 622k units (+56% YoY) in FY28, with a new FY29 estimate of 824k units (+32% YoY). Despite a weaker product mix, average selling prices are expected to rise by nearly 2% due to price hikes. Consequently, revenue growth is anticipated at 54%/57%/36% over FY27F/28F/29F. Nomura has factored in a potential moderation in EV momentum due to easing fuel price risks from the Middle-East conflict.
“Hence, we raise our volume estimates for Ather to 399k (+53% YoY) / 622k (+56% YoY) compared to 399k/510k earlier in FY27/28 and introduce FY29 estimates with 824k units (+32% YoY).”
Nomura
Nomura expects Ather's EBITDA to improve from a negative 6% in FY27 to 5.1% in FY29, with the company achieving PAT breakeven in FY29. Ather's premium positioning is expected to sustain long-term margin potential in the 15-20% range. The current valuation at 4.0x FY28F EV/sales is considered attractive given the outlook.
Ather Energy shares had a modest debut on the Indian exchanges in May last year, listing at Rs 328 per share on NSE, a 2.18% premium over the IPO price. The stock has since soared to a 52-week high of Rs 1,222.10. Over the past week, shares have gained more than 4%, and 16% over the past month, with a market capitalisation of nearly Rs 46,480 crore.
“Along with strong growth, Ather’s premium positioning keeps long-term margin potential in the range of 15-20%, in our view.”
Nomura
Background
Ather Energy's rapid stock appreciation underscores the growing investor confidence in the EV sector. As the company prepares to expand its product lineup and production capacity, stakeholders will be watching closely to see if Ather can capitalize on the burgeoning EV market and meet Nomura's optimistic projections.
Ather Energy's expansion plans and premium positioning are key factors driving investor confidence. As the company navigates the evolving EV landscape, its ability to meet growth projections and maintain market share will be critical in sustaining its stock momentum.
