Ather Energy’s March quarter (Q4FY26) results are a classic case of operating leverage in action. While revenue surged 74% year-on-year to ₹1,175 crore, matching market expectations, net loss narrowed significantly, shrinking 57% to ₹100 crore.
However, investors remain cautious despite these gains. Volume growth was robust, supported by rapid network ramp-up (700 experience centres versus 350 last year) and the continued success of the Rizta scooter. The company also significantly expanded its service and charging networks. Despite higher spends on marketing and expansion, margins improved with operating leverage.
Ather is now the third-largest electric two-wheeler company by volume, with a market share above 18%. Industry-wide electric vehicle (EV) penetration in scooters has already crossed 16% and is expected to reach 38% by FY30, according to Nomura Research. Ather’s capacity expansion — from 35,000 units a month at present to an additional 42,000 units a month via its upcoming Aurangabad plant — suggests management is preparing for sustained demand.
Macro headwinds and margin pressure
But higher crude oil prices due to the West Asia war are a double-edged sword for the company. Higher petrol prices boost EV demand, but rising commodity costs (particularly lithium cell prices, which are up 40-50%) are squeezing margins. Ather’s recent price hikes (about ₹4,000 between December and April) only partially offset these pressures.
Demand risks are also significant. Elevated fuel prices could hurt rural consumption, particularly if El Niño-driven weather disruptions trigger volatility in agricultural wage growth. This is particularly relevant as Ather prepares to enter the mass segment ( ₹1 lakh to ₹1.25 lakh) in the upcoming festive season with its EL platform, arguably its largest growth lever.
Also, subsidy support ( ₹5,000 per scooter under PM E-Drive) may be discontinued after July, and supply-chain risks for rare-earth magnets, dominated by China, remain an industry-wide concern.
At an EV-to-sales multiple of about 5, based on Bloomberg consensus estimates, the stock’s valuation appears stretched in the near term. This premium is difficult to justify, given the mounting pressures from raw material costs, regulatory shifts, supply-chain disruptions, and intensifying competition.
But the long-term outlook remains strong. Nomura notes that the EL platform can expand total addressable market by 50% while significantly reducing costs with vertical integration like in-house battery pack assembly, and lower logistics expenses for North and Middle India—the regions expected to drive the bulk of future growth.
Combined with the optionality from motorcycles and potential benefits from production-linked incentive (PLI) schemes, Ather's growth runway remains compelling.