Ather Energy Achieves Record Q3 Performance Amidst Challenging EV Landscape
New Delhi: Ather Energy Ltd has delivered a remarkable financial performance in the December quarter, reporting record revenue and moving significantly closer to profitability. This achievement comes at a time when the electric two-wheeler market faced headwinds due to recent tax reductions on fossil fuel-powered vehicles.
Financial Highlights Show Strong Growth Trajectory
The electric scooter manufacturer witnessed its total revenue surge by an impressive 53% year-on-year to ₹996 crore during the third quarter of financial year 2026. This growth was primarily driven by a substantial 50% increase in e-scooter sales, which reached 68,000 units for the quarter.
Perhaps more significantly, Ather's losses more than halved to ₹85 crore compared to the same period last year. The company's operating margin showed dramatic improvement, with earnings before interest, tax, depreciation and amortization (Ebitda) climbing 16 percentage points from -19% to -3%.
Expanding Distribution Network Fuels Growth
Tarun Mehta, co-founder and chief executive at Ather Energy, highlighted the company's expanding retail presence as a key growth driver. "We closed Q3 with 600 stores open pan India, and we are very much in line for opening 700 stores by the end of this fiscal," Mehta stated during the post-earnings call with analysts and investors.
He attributed the strong performance to effective execution across the company's partner network, noting that distribution expansion has proceeded according to planned guidance. This retail expansion strategy appears to be paying dividends despite broader market challenges.
Market Context: GST Cuts Impact EV Penetration
Ather's impressive results unfolded against a backdrop of shifting market dynamics. The September reduction in goods and services tax (GST) on most internal combustion engine (ICE) two-wheelers from 28% to 18% narrowed the price gap with electric vehicles, which continue to enjoy a concessional 5% GST rate.
This policy change significantly impacted electric vehicle penetration during the festive quarter. According to Federation of Automobile Dealerships Associations (Fada) data, EV penetration dropped from 8% in September to 4.6% in November before recovering to 7.4% in December.
Industry Positioning and Competitive Landscape
Ather Energy has emerged as India's third-largest electric two-wheeler manufacturer, surpassing both cross-town rival Ola Electric Ltd and its largest shareholder Hero MotoCorp Ltd. The market is currently led by TVS Motor, followed by Bajaj Auto.
January sales data from the government Vahan portal reveals Ather sold 21,924 scooters, nearly three times the 7,512 units recorded by Ola Electric. Notably, Ola's January sales represented their lowest performance since going public in August 2024.
Margin Improvement and Future Challenges
The sharp improvement in Ather's profitability margins occurred during a quarter when Bajaj Auto's battery-powered two-wheeler business achieved operational breakeven. Ola Electric had previously reached Ebitda breakeven for its EV two-wheeler business in the July-September quarter.
Ather attributed its margin improvement to achieving greater sales scale and implementing better cost management practices. However, the company acknowledged upcoming challenges, including rising input costs and the impending conclusion of government subsidies for electric two-wheelers under the PM E Drive scheme by March.
Market Segmentation and Growth Outlook
During the earnings call, Mehta provided insightful analysis about market segmentation, suggesting that industry observers should evaluate sub-₹1 lakh and over-₹1 lakh scooters separately. "The real growth in the EV two-wheeler industry is being masked because a lot of vehicles below the ₹1 lakh price points have shrunk in the past one year," he explained.
"Products priced above ₹1 lakh have grown at a beautiful growth rate over the last 18 months. When you put the entire industry together, you see a very humble growth...A lot of fluff in the sub-₹1 lakh has disappeared," Mehta added, expressing optimism about recovery signs already becoming visible in the market.
Investor Response and Stock Performance
Despite Ather's shares declining by 2.5% on Monday against a 2.1% rise in Nifty Auto, investors have demonstrated strong confidence in the company's prospects. The stock has doubled in value over the past eight months since the company's listing, reflecting market optimism about Ather's long-term potential in India's evolving electric mobility landscape.
Ather Energy stands as the first pure electric vehicle company to release quarterly results, with larger rivals Bajaj Auto Ltd and TVS Motor Co. reporting their financials last week. The company's performance suggests resilience and strategic positioning in a market undergoing significant transformation.
