Ather is energised

Ather Energy is up 5.72% to Rs. 1,664.10, extending its sharp rally following strong Q2 FY27 results. The stock opened at Rs. 1,600 against its previous close of Rs. 1,574 and touched an intraday high of Rs. 1,672.90. Trading volume stood at 6.29 lakh shares, with turnover of Rs. 103.38 crore and market capitalisation of Rs. 66,014 crore. However, market depth showed sell quantity of 72,655 shares against buy quantity of 40,891, suggesting some profit booking after the recent surge.

Trigger

• Q2 FY27 revenue from operations surged 63% YoY to Rs. 1,464.24 crore.
• Consolidated PAT turned positive at Rs. 1.26 crore, against a loss of Rs. 154 crore a year earlier.
• Company-reported EBITDA improved to Rs. 74.2 crore, with EBITDA margin rising to 4.9% from negative 9.6% YoY.
• Electric two-wheeler sales volumes increased 42% YoY to 93,211 units.
• Customer enquiries jumped 109% YoY to approximately 10 lakh.
• Pre-orders more than doubled to 1.80 lakh units.
• Adjusted gross margin improved 160 bps YoY to 24%.
• Board approved Rs. 122 crore of capacity expansion, taking annual manufacturing capacity to approximately 11.4 lakh units by Q2 FY28.

The biggest positive is Ather's transition from substantial losses to quarterly profitability, supported by stronger sales and improving operating efficiency. The company has reported its second consecutive EBITDA-positive quarter, while higher volumes, better product mix and pricing actions have helped offset elevated costs of aluminium, copper, lithium and other raw materials. Non-vehicle revenue, including software, charging, accessories and services, increased to 15% of revenue from 12% a year earlier, supporting overall margins.

Another important development is that demand appears to be running ahead of production. Ather's Hosur facility operated at 98% capacity utilisation during peak production in Q2 FY27, prompting the company to increase annual capacity by 75,000 units at Hosur and another 1.5 lakh units at its upcoming Maharashtra facility. The expansion will take combined installed capacity to approximately 11.4 lakh units annually, providing room for further volume growth.

The caution is valuation and sustainability of profits. Despite the encouraging turnaround, quarterly net profit of just Rs. 1.26 crore remains extremely small against a market capitalisation of Rs. 66,014 crore. Trailing earnings are still negative, making conventional PE valuation unsuitable. Furthermore, higher production capacity will require sustained demand, efficient utilisation and disciplined capital spending.