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Ather logged a strong Q4, with revenue up 74% YoY on 75% YoY volume growth amid flattish ASPs. Gross margin (ex-incentive; GM) stood at 18.4% vs 19.6/17.3% in Q3/Q2 led by sustained BOM cost reduction, strategic sourcing, and calibrated pricing actions (Rs1-1.5k hike in Q4). EBITDAM loss fell to -5.9% (vs -7.6/-14.7% in Q3/Q2). The management noted that E-2W demand is turning more mainstream (tier-3 markets growing faster vs tier-1) with added push from fear of elevated fuel prices/LPG shortages (refer to Fuel price fears expediting EV playbook; Ather remains top pick). The EL platform (offers a significantly lower cost/better margin vs current) is expected to be launched during CY26 festive and would help Ather target the mass segment (belly of the market; Rs0.1-0.13mn), where it does not yet have presence. AURIC (has multiple vertical integration capabilities) is expected to go live by Q3FY26 and will add 42k/mth units of incremental capacity from 35k/mth capacity now (already at 95% capacity utilization). Even as Ather is taking multiple initiatives like diversified sourcing, calibrated price hikes (Rs2.5k in Apr-26; more in coming months) and rising share of LFP batteries, it expects near-term margin pressure due to elevated commodity prices (aims to partially share this with suppliers; bulk burden to still lie with Ather). We continue to like the E-2W theme and prefer to play it with Ather, given its established brand/product, robust GM, and share-gain potential owing to scale up of the EL platform. We cut FY27E EPS by 27% (Exhibit 22); retain BUY and TP of Rs1,150 at 7x FY28E EV/S (like EIM’s implied 7.5x EV/S for RE during its FY13-17 growth phase).

Sequential improvement in gross margin, EBITDAM continues

Revenue was up 74% YoY at Rs11.7bn, led by 75% YoY volume growth amid flattish ASPs QoQ. EBITDA loss stood at Rs7bn (vs Rs7.2bn/Rs17.2bn in Q3FY26/Q4FY25); EBITDAM improved by 163bps QoQ to (5.9%) owing to a 200bps QoQ fall in staff costs, 110bps gross-margin expansion partially offset by 140bps QoQ rise in other opex. APAT losses rose to Rs1bn (Q3: Rs0.8bn) on higher-than-expected depreciation/lower other income.

Earnings call KTAs

1) Demand is turning increasingly mainstream, enabling deeper market penetration, with tier-3 markets growing faster vs tier-1 (the trend has accelerated in recent months). Customers are showing willingness to pay a premium for greater assurance (eg strong uptake of the 8Y battery warranty).

2) The EL platform is expected to be launched during the CY26 festive season and would deliver a substantially better cost structure and margins. This would aid Ather in entering the Rs0.1–0.13mn mass segment (no presence as of now), offering large upside potential with limited cannibalization (EL’s margin better than Rizta’s).

3) Phase-1 of AURIC is expected to go live before CY27-end. The location is strategically chosen to reduce logistics costs and will also support higher vertical integration. AURIC would add 42k/mth of additional capacity from 35k/mth units capacity now.

4) The biggest lever for cost reduction will be the EL platform (represents the largest source of COGS improvement); while 450 and Rizta can also see further cost reductions, the priority is EL.

5) Commodity prices have seen a sharp uptick (eg Lithium prices rose from USD8/kg to Rs22/kg; AL prices expected to rise further; cells comprised 15-16% of BOM – this too has risen in recent quarters.).

6) Ather has taken Rs1-1.5k price hikes in Q4 and an additional Rs2.5k hike in Apr-26; while Ather aims to share some of the cost burden with the suppliers, bulk of the burden would still be Ather’s, to pass on/absorb.

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