HDFC Securities Initiates Coverage On Ather With ‘Buy’ Rating

Brokerage firm HDFC Securities has initiated coverage on recently listed electric two-wheeler maker Ather Energy with ‘Buy’ rating. 

HDFC sets the target price for EV startup at INR 409, a 30% uptick from its last closing price (June 13) on the BSE. 

Following the rating, Ather Energy’s stock jumped 2.32% to trade at INR 320.90 on the BSE during intraday trading today. 

With a surge in its share price, the startup’s market capitalisation stood at INR 11,892.64 Cr at 2:38 PM with more than 5 Lakh shares exchanged hands by then.  

In the last one month, the stock has jumped 1.24% at the time of writing and ended in green in five out of the last seven sessions. 

However, it has lost 3.8% since its listing on May 6 as of its last closing price. 

Ather Energy made its stock market debut on May 6, with its shares listing at a 1.57% premium on the BSE. Its shares debuted at INR 326.05 apiece on the BSE against the IPO issue price of INR 321.

On the NSE, the stock opened at INR 328, a 2.18% premium over the IPO price.

What Does The Brokerage Firm Anticipate For Ather? 

Ather Energy has been able to stick to its fourth position in the EV 2W market with a retail market share of 13.4% in 5MCY25. 

With its expanding product portfolio, dealership network and focus on marketing, HDFC anticipates that it may outgrow the industry over the medium term and gain market share. 

Ather may improve profitability and become EBITDA positive in the medium term with improving unit cost economics and expected market consolidation that could lower competitive intensity, says the brokerage report.

HDFC expects Ather to bring EBITDA to break even by FY30, and be flattish in FY31 due to the gross margin impact from partially absorption of the GST rate increase.

“From FY32, we expect EBITDA margin to improve meaningfully on improving economies of scale, better operating leverage, improving localization content, better exports traction, and market consolidation, which could lower the competitive intensity. We expect it to reach an EBITDA margin of 9.5% in FY40,” the report said.

Besides, it also anticipates Ather’s gross margins to see improvement over FY26 and FY27 on the back of transition to LFP battery, shift to EL, a new scooter platform, and increase in merchandise and accessories sales,

“…we expect gross margins to improve from 16.8% in FY25 to 18.0% in FY26, to 20.0% in FY27 and 21.2% in FY28,” it said. 

It further noted that Ather’s move towards the development of the EL platform signals new launches in the affordable scooter segment. HDFC expects that “the portfolio expansion and accelerated dealer store expansion will enable it to scale well.”

What’s For Ather Post Listing? 

Ather became the second EV startup to list on the bourse after Ola Electric. It also narrowed its net loss by 17% to INR 234.4 Cr in the fourth quarter of FY25 from INR 283.3 Cr in the year-ago quarter. However, on a sequential basis, the company’s loss grew 19% from INR 197.8 Cr. 

Ather’s operating revenue rose 29% to INR 676.1 Cr during the quarter under review from INR 523.4 Cr in the year-ago quarter. It increased 7% from INR 634.9 Cr in Q3. 

Its chief business officer Ravneet Phokela in an interaction with Inc42 last month said that the company is now turning its focus towards northern India. 

“With the Rizta, we’re now catering to the bulk of the northern India market that the 450 couldn’t address. It gives us the license to win in regions like North India and West India,” said Phokela. 

HDFC Securities also mentioned in its report that the new more affordable scooter ‘Rizta’ in the portfolio has opened up many more markets for Ather in the country, such as Gujarat and Maharashtra, states in which affordable scooters are preferred.

With the dwindling supply of rare-earth metal, Ather is exploring the use of rare earth-free motors to reduce dependence on the rare earth metals while also reducing costs.

Founded in 2013 as an IIT Madras incubated startup, Ather is one of the leading escooter OEMs in India. It competes with Ola Electric, Bajaj Auto, TVS Motor, Hero MotoCorp, Honda, and more. Over the years, the company raised more than $630 Mn in funding from the likes of Hero MotoCorp, National Investment and Infrastructure Fund (NIIF), Singapore-based GIC’s Caladium Investment, Zerodha’s Kamath brothers, among others.