India-based Ather Energy released its Q1 FY 2026 numbers yesterday. There is a significant improvement in nearly all measurables, and the Bengaluru-based premium scooter manufacturer appears to be on the right track. The Indian market thinks so, as this was how the Ather Energy stock reacted yesterday.
The technical chartists amongst us would consider the above a simple case of the stock price breaking upwards out of a parallel channel. We should see more highs.
In simple terms, the market expects Ather to do well in the future.
Now, we don’t have to drop the Ola Electric chart here (but we will). It is in sharp contrast to Ather Energy. The Ola Electric stock had listed close to its issue price of INR 76 and enjoyed an upward journey for a few weeks, touching a high of INR 157 just a few days after listing.
However, since then, the stock has been on a decline and trades at about INR 41 as we type this. This is a level that it has stayed at for many weeks now, with the stock trading at a near 50% discount to its issue price.
In contrast, the Ather Energy stock is now trading at a 23% premium to its issue price of INR 321.
But we are not a stock-picking website. Or one on technical analysis. We have no business in that business. Instead, I wanted to sleep over the numbers and see if I still feel all happy about them in the morning.
First, The Numbers
In Q1 FY26, Ather reported revenues of INR 6,446 million, an 89% jump from Q1 FY25 revenues of INR 3,606 million.
During the period, Ather managed to improve Gross Margins from 19% to 23%. This drove the EBITDA margins from (negative) 33% to (negative) 16%. At the Net Margin level, Ather Energy reported (negative) 26%, an improvement from (negative) 50% in Q1 FY25.
That is an all-around improvement, if one looks at that on a year-over-year basis.
However, the profitability numbers still look worrying, and Ather’s scale has not yet reached a level where there is a meaningful impact on costs. While the company nearly doubled sales over last year, the EBITDA (losses) only improved by about 12%, from INR 1,205 million to INR 1,060 million.
Similarly, the net losses have stayed flat (INR 1,782 million vs INR 1,830 million). This indicates that Ather’s scale increase has been able to keep things stable but not improve profitability on an absolute basis.
Improving Scale
An improvement in profitability can be driven by a massive scale improvement and a simultaneous cost reduction. Ather is improving in scale continuously, and one should look at their sales numbers in the light of their (still) limited distribution operations. With only 446 outlets, sales of 46,078 units in the quarter come out to an average of about 103 scooters sold per outlet in the quarter.
That units-per-outlet number is respectable and perhaps the best in the industry for pure EV sales, even when we include players like TVS and Bajaj in the mix.
In comparison, a laggard like Ola sold 58,603 units in the same timeframe from 4,000 outlets, an average of less than 15 scooters per quarter, per outlet.
So the scale is improving and should improve further as the brand has momentum and is expanding outlets fast. However, as of present, Ather is a South India-based player with market leadership (electric scooters) in the four southern states and is fast making inroads in key cities in other parts of the country. It’s a WIP.
However, the future expansion, arguably in the north of the country, would be challenging. The North is more populated, yet also has a much lower per capita income than the South. It is also a motorcycle-biased market, not an ideal market for premium electric scooters.
The Need to Reduce Costs
It is a natural expectation that any improvement in scale would drive a reduction in costs. However, the improvement in scale at the Ather level is no match for what the Indian market considers as scale. As an illustration, what Ather sold in the quarter is Honda’s ICE scooter output in a week.
Scale efficiencies are still far away.
To be fair, the company has considerably reduced the Cost of Goods Sold, a good indicator of BoM costs.
However, this remains a concern. Ather is high on tech, and the choice of materials of the 450 platform makes it naturally expensive. The battery packs on both the 450 and the Rizta are NMC, though there is a scramble to go LFP soon with the upcoming EL platform.
EL Platform? The Key to Ather?
The 450 is an expensive scooter platform. Built with passion, it has heavy Aluminum usage to lower the weight and for better thermals. There is a limit to how much cost can be shaved off. Ather has achieved a lot of that cost reduction with the Rizta derivative, which replaces the Al-frames with steel tubular ones, a smaller motor, and other cost-saving measures to save on BoM. However, even the Rizta is expensive as a scooter.
That’s where the EL platform is important. It is the next stage in cost reduction and would come with an LFP battery. The shift to LFP means that this is largely an all-new ground-up platform. It is likely that it may spawn a new scooter family that sits below the Rizta. That would be an improvement in both scale and costs.
We don’t like the idea of low-cost Athers. Before that, Ola had done that, and the brand is not better off because of that. At the same time, there is a sweet space INR 15,000 below the Rizta where there are volumes to tap.
InsightEV – Global Electric Mobility
