Shares of Ather Energy Ltd climbed 4% in Thursday's trade, reaching a high of Rs 1,646.45 on the BSE, following a positive revision in its target price by foreign brokerage Nomura. The firm highlighted a strengthened outlook for Ather, primarily driven by faster electric vehicle (EV) adoption in India and the successful launch of its new Konarc platform.
Nomura Raises Target, Cites Strong EV Momentum
Nomura, which identifies Ather as its top pick in the two-wheeler (2W) segment, has raised its target price for the stock to Rs 1,926, up from its previous estimate of Rs 1,714. This revised valuation is based on an unchanged 5.5 times estimated FY29 EV/sales.
The brokerage's optimistic stance stems from several key factors:
- Accelerated EV Adoption: Nomura notes that the two-wheeler industry's EV penetration is progressing faster than anticipated, with improving product offerings, higher consumer acceptance, supportive policies, and favorable total cost of ownership (TCOs) acting as key enablers.
- Konarc Platform Launch: The introduction of the Konarc platform has further reinforced Ather's technological leadership. This platform brings a suite of advanced features, including an Advanced Electronic Braking System (AeBS), MagicKey, AutoPop, and AirWalk, designed to enhance the everyday riding experience on Z variants.
- EL Platform Potential: Nomura believes Ather's new EL platform will significantly expand its total addressable market (TAM). Its scalable architecture is expected to enable Ather to offer products at more competitive price points while maintaining its tech-led differentiation.
Updated Forecasts and Margin Potential
In line with its bullish outlook, Nomura has substantially increased its volume and revenue estimates for Ather Energy:
- Volume Estimates: FY28-29 volume estimates have been raised by 104% year-over-year to 794,000 units.
- Revenue Growth: The brokerage now expects robust revenue growth of 54%, 100%, and 31% over FY27F, FY28, and FY29, respectively, marking an increase of 10-11% from its previous projections.
Nomura also emphasized Ather's premium market positioning, which is expected to sustain long-term margin potential in the range of 15-20%. The firm believes Ather's premium valuation, at 5-7 times EV/sales, should be maintained.
The ongoing shift towards 'scooterisation' within the Indian market is also expected to further aid in EV adoption. Consequently, Nomura has raised its EV 2W penetration forecast to 22% by FY30, up from 19.6% previously, implying a 45% EV penetration for scooters.
"We believe the EL platform will double the TAM for Ather, with its scalable architecture, and should enable Ather to offer products at more competitive price points while retaining its tech-led differentiation. The success of the new motorcycle platform in the future can provide further upside to our estimates," Nomura stated in its report.