Ather Energy, the recently listed electric two-wheeler manufacturer, has earned a strong endorsement from global brokerage firm Nomura, which has named it the top pick in the segment. The firm has reiterated its Buy rating on Ather with a target price of ₹458 per share — implying an upside potential of nearly 16 per cent.
Despite maintaining a positive view on legacy players like TVS Motor, Nomura believes Ather is better positioned to capitalise on India’s EV growth story, citing its superior growth trajectory and strategic expansion initiatives, Financial Express reports.
Why Ather stands out
Nomura highlights that Ather’s current valuation of 3.3x EV/sales (based on average FY27–FY28 estimates) is justified given its high-growth outlook. The stock trades at 2.6x EV/sales for FY28 — in line with peers like TVS — but with a far more aggressive medium-term expansion plan.
“Ather’s potential medium-term growth trajectory is the highest within our coverage universe,” Nomura noted in its report.
Volume growth driven by EV tailwinds
The brokerage estimates Ather’s volumes to grow at a CAGR of 41 per cent between FY25 and FY28, reaching 4.36 lakh units by FY28. This growth will be fuelled by the expansion of Ather’s retail footprint — the number of stores is expected to double from 350 in March 2025 — along with upcoming launches based on the new EL and Zenith platforms.Nomura also underlined the larger industry trend, forecasting EV penetration in the two-wheeler segment to rise from 6 per cent in FY25 to 19 per cent by FY30. Internal combustion engine (ICE) volumes, on the other hand, are likely to peak around FY30, especially as BSVII emission norms come into effect.
Rizta ramp-up and margin boost
Ather’s latest family scooter, Rizta, is already gaining traction and playing a key role in expanding market share, according to the company’s management. The brand’s efforts to enhance consumer confidence in EVs — coupled with upcoming launches from Japanese players — are expected to push industry penetration further.From a margin perspective, Ather reported a robust gross margin of 19.6 per cent in Q1 FY26, beating Nomura’s estimate of 18.6 per cent. Revenue for the quarter surged 79 per cent year-on-year to ₹645 crore. Expense ratios also improved — with expenses/sales at 22.1 per cent and employee costs/sales at 18.4 per cent — reflecting better operating leverage.
The management pointed out that cost optimisation is being driven by falling battery cell prices and ongoing value engineering efforts. However, the company also flagged rising marketing and network expansion costs as it builds scale.
Near-term challenges
Nomura noted a potential production headwind in Q2 FY26 due to a rare earth material shortage, which may impact about seven days of output. Nonetheless, this is…
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