HSBC Initiates Coverage On Ather With 'Buy' Rating

Shares of Ather Energy jumped almost 4% to INR 358.05 in the morning trade on the BSE after HSBC initiated coverage on the electric two-wheeler manufacturer with a ‘Buy’ rating.

The brokerage gave Ather a target price (TP) of INR 450, a 30% upside from its last closing price.

Calling it a good company in a tough industry, the brokerage report said that Ather’s product quality and technology leadership are difficult to replicate even for rivals with deep pockets.

After the surge in its stock price, Ather’s market capitalisation stood at INR 12,695.29 Cr with more than 20 Lakh shares traded hands on the exchanges by 12:47 PM.

The stock also jumped on the back of the Department for Promotion of Industry and Internal Trade (DPIIT) signing a Memorandum of Understanding (MoU) with Ather Energy to strengthen EV manufacturing and the clean mobility ecosystem.

Under the agreement, DPIIT and Ather Energy will focus on strategic mentorship for deep-tech startups, infrastructure support for startups in the EV value chain, joint innovation programs such as the Bharat Startup Grand Challenge, co-hosted talent and skill development initiatives, and participation in events like Startup Mahakumbh along with on-ground exposure visits.

Ather made its stock market debut in May with its shares listing at a 1.57% premium on the BSE. Ather’s shares listed at INR 326.05apiece 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.

Founded in 2013 as an IIT Madras incubated startup, Ather is an escooter original equipment manufacturer (OEMs) in India, competing with Ola Electric, Bajaj Auto, TVS Motor, Hero MotoCorp, Honda and others.

At the time of writing, Ather was trading 1.3% lower at 340.85, while the Benchmark indices were in Green. NSE Nifty was 0.15% up at 24,857.10, and BSE Sensex was 0.18% at 81,486.87 at 12:47 PM.

HSBC Expects Revenue CAGR Of 47% For Ather During FY25-28

Ather is the fourth largest EV two-wheeler manufacturer in India, with a 14% market share in terms of total e2Ws sold in the first quarter of the ongoing financial year (Q1 FY26), as per Vahan database.

The upcoming launch of Ather’s new EL production platform in August this year to target the economy scooter segment should also be a market share tailwind, the brokerage report said.

Ather’s volumes have grown at a compound annual growth rate (CAGR) of 77% over FY22-25, with an EBITDA margin improved from -64% to -26%, it noted.

HSBC highlighted that Ather, despite no production-linked incentive (PLI) subsidy, reported a 19% adjusted gross margin in FY25, with an EBITDA margin of -26% due to lower volumes.

The brokerage firm forecasts a FY25-28 revenue compound annual growth rate (CAGR) of 47% and expects EBITDA breakeven by 4QFY27.

“In FY28, we forecast a gross margin of 28% and an EBITDA margin of c4%, when the monthly volume run rate should hit c45,000, up from the current c14,000. By that time, the first phase (500,000 capacity) of the company’s new Maharashtra plant will be ready to handle additional volumes,” it noted.

It must be noted that in the EV market, automotive giants TVS Motor and Bajaj Auto continued to dominate in the month of June, as their monthly vehicle registrations remained above 20K.

However,total EV sales in India saw around 7% declinein June compared to May, which was reflected in the electric two-wheeler sales volume as well.

As per the brokerage report, in the past two years, the e2W penetration rate has been range-bound at around 5-7%.

“We now expect e2W penetration will reach around 20% by FY30, based on the diffusion of innovation model, which explains why and at what rate new ideas and technologies spread through cultures,” the report said.

Notably, Ather’s EV two-wheeler sales stood at 13,617 in June.

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