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Rising fuel price hikes have acted as a key catalyst for E-2Ws (refer to ‘Fuel price fears expediting EV playbook; Ather remains top pick’). A clear inflection point is visible in the 2W industry, with a faster mix tilt toward EVs and with the E-2W industry growth accelerating at ~44/63/63% in Mar/Apr/May-26 (E2W penetration at 10.7% in Jun-26 vs 6.6% in FY26). Within E-2Ws, Ather has been a consistent outperformer, gaining market share (16.5% as of Jun-26TD vs 14.5% in Jun-25). We believe Ather is at an inflection point with explosive demand currently coinciding with temporary supply constraints, which could optically hurt market share in the near term (current capacity at 35k/m; AURIC to come on line by Oct-26 with full 42k capacity ramp-up in Q4FY27). While commodity pressures could keep margins under pressure in the near term, Ather has plans to mitigate these via meaningful price hikes (2-pronged approach of raising prices for vehicles as well as the stack) and EL platform ramp-up (significantly lower cost, better margin profile) which is expected to be launched during CY26 festive (targeting the belly of the market; Rs0.1- 0.13mn). We build in volume of ~383/539k units for FY27E/28E with 44% revenue CAGR over FY25-28E. We retain BUY and our TP of Rs1,150, basis 7x FY28E EV/S (like EIM’s implied 7.5x EV/S for RE in its FY13-17 growth phase).

E-2W growth accelerating; Ather, a top performer

The E-2W industry is at an inflection point with monthly growth of ~44/63/63% YoY in Mar/Apr/May-26, pushing industry penetration to 10.7% in Jun-26TD (vs 6.6% in FY26). The acceleration is driven by rising fuel prices acting as a catalyst that makes the TCO proposition for EVs more compelling vs ICE 2Ws. Against this backdrop, Ather has meaningfully outpaced industry growth, expanding its market share to 16.5% as of Jun26TD (14.5% in Jun-25), backed by doubling its ECs in last 1Y (700 stores in FY26 vs 351 in FY25). Ather dominates as #1 in the South, while having expanded in non-South regions (key focus on Central India, where Ather’s market share is 17% as of Q4FY26).

Near-term supply tightness transient; AURIC ramp-up to offset strong demand

Ather is expected to reach full capacity of 35k units/month from Jul-26. As a result, Ather is likely to see some unrealized retail potential loss, optically denting its market share in the near term. However, the AURIC facility comes on-line by Oct-26 with full additional capacity of 42k units/month expected to ramp through to Q4FY27, effectively more than doubling Ather's current production capacity. We believe the supply constraint is transient and the superior demand visibility is likely to help absorb AURIC volumes.

Near-term margin headwinds to be offset by Ather’s multiple initiatives

Commodity costs have risen (~8% of 4QFY26 ASP) across key inputs like lithium (due to China's anti-involution campaigns; mining license cuts), copper/aluminum (AI datacenter demand), and plastics/polymers (disrupted crude supply); also, expiry of FAME subsidy (~4% of ASP) could hurt near-term margin. To offset this, Ather is taking multiple initiatives via i) 2-pronged price hikes (vehicle plus stack), ii) value engineering initiatives with transition to LFP from NMC chemistry, copper-clad harnesses to reduce copper usage per vehicle, steel frames replacing aluminum on EL platform, iii) EL platform ramp-up on a better margin profile due to lower BoM and wider TAM (mass segment: Rs0.1-0.13mn)

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