Ather Energy Ltd (ATHERENERG) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day and welcome to the Ather Energy Limited's Q2 FY27 results conference call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Murali Sasidharan, Head of Communications at Ather Energy. Thank you and over to you, sir.
Murali Sasidharan (Ather Energy): Thank you. Good evening, everyone and welcome to Ather Energy Limited's Q2 FY27 earnings conference call. From the management, we have with us today Mr. Tarun Mehta, Executive Director and Chief Executive Officer and
Murali Sasidharan (Ather Energy): chief financial officer. Before we begin, let me draw your attention to the fact that the discussion today may include certain forward-looking statements which are predictions, projections, or other estimates about future events. These statements reflect management's current expectations about the future performance of the company, and are subject to various risks and uncertainties that may cause actual results to differ materially. Please note that this conference is being recorded. As a reminder, all participants will be in a listen-only mode, and there will be an opportunity to ask questions after a brief overview from our management team. With that, I now request Mr. Tarun Mehta, Executive Director and CEO, Ather Energy, to share his opening remarks. Over to you, Tarun.
Tarun Mehta (Ather Energy): Hey, thanks Rohan. Welcome, everybody. Welcome to our earnings call for Q2 FY '27. This has been a pretty stellar quarter for us, and I would say actually the entire industry with industry registrations hitting a growth of 82% year-on-year, netting out at about 6 lakh sales for the entire quarter. Phenomenal growth across all the three zones that we track: Middle India, South India, and Rest of India. What's really heartening is, I want to bring attention to two important points. First, the growth is becoming more broad-based, and that's very important and very, very healthy to see. For example, if you see last quarter, the growth across the zones was a bit different, with South India leading at 82%, then Rest of India at about 54%, and Middle India in the middle at 66%. But in Q2, we are starting to see signs of growths pretty much coming in at the same level across the three zones: at 82% in the south, 85% in Middle India, and 79% in Rest of India. So, quite a broad-based growth overall. The second important trend is that South still continues to be an absolute monster of a zone, growing at 82% despite a fairly healthy base already, which is what we want to see, obviously, because electrification is still at early stages. Q2 was the first quarter when pan-India E2W penetration crossed 10%, netting out at about 11.2% for the full quarter. And very we do believe that this is still supply-constrained at an industry level, and coming quarters should continue to remain fairly healthy for the entire industry. For us, Q2 was particularly important because this was the quarter when we had our annual Ather Community Day 2026, and where we launched a whole bunch of things from our ecosystem to software to, obviously, the new product, Halo. Let's start with some of the launches we did in this ACD. ACD overall has become a pretty landmark event for us. It's grown from its humble origins of about 6-700 owners who came in in 2023 to almost 6,000 people who got together in Bangalore this year. Fantastic coverage, many, many, many viral moments, and a lot of attention that it helped bring to the brand and established its equity across the country. Some of the important things that we launched in this ACD were, starting with Ather TrueHealth. This is a comprehensive health report of your scooter, where we basically started showing the health of different components, like the battery, brakes, belts, dashboard, motor, etc., on your mobile app. So you can just go to your mobile app, click a button, and see the health of different components, which is quite pioneering in our industry, and we convert all of that into a simple health score. Essentially, we want the idea here is we want to give EV owners a lot of confidence and comfort that how their EV is performing even after years of usage. And we took it one step forward by starting we've started to show an estimated resale value for scooters that have crossed three years of ownership. The intention, again, is not at this point to establish a business channel, but to again give EV owners a lot of conviction that they've made the right choice by going to electric and their vehicles continue to retain a lot of value. The second thing that we announced was Ather Node, which is an infrastructure product that enables EV charging in apartments. It's a really smart system that comes with automatic queuing, smart load management. It draws power from common loads instead of individual houses, freeing up a lot of complicated infrastructure that home owners otherwise would need to do. It comes with customized billing and is very cost-effective. Ather Node is is getting industrialized right now, and will commence operations, commence deployment in the next few months as we are onboarding our first few set of apartments. Third big thing was Ather Bedrock, which is our fifth generation battery packs
Tarun Mehta (Ather Energy): So they come with 10 years or 1 lakh km warranties with a 70% performance guarantee. These batteries have already gone live across the entire portfolio from 450, Rizta, and Konark. And, obviously, the big launch for Ather underpinning all of it this year was Konark, our mainstream product going live this year. Konark, we decided to focus a lot of a lot in this product on the fundamentals of scooters in India. So this is our first scooter that come with 14-inch front wheels. It's It's come with one of the longest rear suspensions in the country for scooters. It comes with a beautiful paddock grab handle, adjustable backrest, on-board charging, combined chargings, you know, so that customers are not even locked into one charger spec over their ownership period, our first scooter with the center stand, metal body, a remarkably improved service layout, so that you only have to service your scooter once in a year. And, obviously, it comes with the Bedrock battery with 10-year warranty periods. So overall, Konark focused a lot on the fundamentals with the target being, how do we get more petrol scooter buyers to buy electric? It's launched to great reception already. But this was an Ather product, so obviously, it did not just do this. It also brought to fore some of the really new magical things that our teams have spent a couple of years now really crafting and perfecting. Features like AirWalk, where the motor detects that you're trying to move the vehicle and gently assists you, the end effect being the vehicle seems remarkably lighter then than it actually is. Or a feature or or a new feature called Magic Key, which is essentially keyless, but built in a very intelligent way so that it gives people who may not be very savvy with tech a lot of confidence in in owning a keyless product. Lost key detection, an authenticator that works offline, an a smart key that works even if it's run out of battery, one that locks the handle bar automatically, a lot of features there. One of the more viral features from this launches was AutoPop, where you could just come tap the rear of the scooter and the seat pops up, one that consumers are absolutely very excited for and is going to get into production in the coming few months. And finally, AEBS, Ather's proprietary Advanced Electronic Braking System, which helps which is a remarkable improvement over CBS and reduces the stopping distance substantially even on slippery roads. So with Konark now live, we believe we've built a very healthy portfolio in this scooter segment. Between 450, Rizta, and Konark, we believe we've covered the market quite well. Obviously, there are still many small segments that remain and we will focus on them also, but I think for the mainstream market, between what Konark's brought to the fore, we've probably covered the bulk of the territory already. And over the next 12 to 18 months, as different variants over the next, sorry, couple of two couple of quarters, as the different versions of Konark keep keep hitting the market, we believe our TAM will continue to expand. We've seen a remarkably strong surge in our demand metrics across the board. Overall, for the EV industry as a whole, the EV searches, online searches, you know, on Google and AI, they were roughly up about 34% year-on-year, so very healthy growth, obviously. Ather searches, on the other hand, were up almost 94%, so obviously a much, much, much stronger growth. Ather inquiries were up even more at about 109%, crossing 10 lakh inquiries for Q2 FY '27, and pre-orders were up at about 108% year-on-year, hitting about 1.8 lakh pre-orders in Q2 FY '27. All of these top of the funnel metrics have translated into very strong wholesale volume growth. Wholesale volume grew from 65,000 units same time last year to 93,000 units in Q2, 42% growth year-on-year. This has been enabled by a very healthy ramp-up of our capacity, manufacturing capacity, which has gone up from 28,000 units average per month last quarter to 33,000 units average per month in Q2 FY '27. And, obviously, all that's also translated into even stronger growth in year-on-year registrations, up from 57,000 units last same time last year to 92,500 units, almost 60% growth year-on-year. Increasingly, and particularly with Konark launching in a phased manner from last quarter, we've seen an even sharper growth in rest of India then let's say south or middle India. Obviously, this is also because we've started to prioritize a little bit more of sales in the rest of India, particularly Northern markets. Konark itself is being released in a staggered manner with early releases focusing on Uttar Pradesh and Rajasthan, now expanding into Madhya Pradesh, Bihar, Maharashtra, Gujarat, Punjab, and many other states. And over the coming months coming few months, with all
Tarun Mehta (Ather Energy): looking at bringing into Nagpur, the southern markets. Overall, all this rising demand, obviously, necessitates a fresh look at capacity. Enquiries have honestly gone parabolic, as you can see in our presentation deck that we've shared online. Pre-orders have also risen up quite a lot, and though we've produced 33,000 units average last quarter, on current demand trajectory from the current stores, our team's internal estimate is that we have roughly about 20,000 units per month of unrealized retail that we are not tapping into yet. Now to solve this, Hosur, which is already at its tether's end, it's at 35,000 per month capacity, and Auric phase one, which is going live and will finish complete installation of its CAPEX by Q4 FY '27, adds an incremental 42,000 units, which means a net capacity of 77,000 units per month. But if current demand is already in the 50, 50 to 60,000 units zip code, 77,000 units obviously does not leave a lot of headroom to grow. So, this is a question that we've been pondering for the last few months. What we've decided to do, and we've just taken board approval a few hours ago, is we've decided to enhance capacity in both Hosur and Auric phase one in the coming months itself, with Hosur capacity expansion happening right away, an incremental 6,000 units per month capacity that will go live this quarter, later this quarter. And Auric phase one, an incremental 12,000 units per month incremental capacity that will go that will finish that that will become that will go live by Q2 FY '28, taking our total installed capacity up from 9.2 lakh units, which is where we were we would have been by, let's say, middle of next year, to 11.4 lakh units by Q2 FY '28. So, this is an important jump and an important near term jump, I would say, that our team has decided to focus on, giving us hopefully enough headroom to grow for the next couple of years as hopefully drives a lot more growth across the country for us. I know the last few months have been quite quite tight for us with demand far outstripping supply. But with all this capacity expansion finally starting to yield fruit, I'm very excited about the next few months as we start seeing results of all of this in the top line. Coming to unit economics, bad news, good news. First, bad news. Commodities have been worse than we estimated a couple like just a quarter ago. 3-4 months ago, we were hoping for aluminium to be cooling down because there were a lot of murmurs of the Hormuz crisis would be resolved soon. Copper was estimated to have flatlined. Plastics was going to get better because, again, Hormuz was going to be resolved, and memory was estimated is probably already at its peak. Unfortunately, all these four have proven out to be incorrect in the at least in the short term. Aluminium's run much higher, at least in Q2. Though in the last few days, it's showed some signs of cooling down, so fingers crossed. Copper has run really far ahead particularly because of pre-buying by US and much higher AI demand. Plastics also remain disrupted for much longer because of the Hormuz crisis. I'm, again, hoping that that that peak is hopefully not like hopefully behind us now. Unfortunately, memories continue to be really, really complicated and expensive, and we don't see any near-term solution to that. Overall, commodities have been worse than we hoped. I do continue to believe that this is a temporary hit, but, yes, it's definitely lasted a few quarters longer than I would have thought. But against that, teams have put in a remarkable amount of discipline and focus to bring in forth a lot of very, very good solutions, starting with price hikes and SKU management. To give a frame of reference, our average ex-showroom price across the country, weighted average weighted average ex-showroom price average was roughly about 150k in Q4 FY '26, including Pro Pack sales that we do. It is at Pro Pack sales that we do. That number for Q2 FY '27 came in at 164k. So, a ₹14,000 increase in average ex-showroom price. So, a phenomenal improvement, and, honestly, one that even I was surprised that the teams pulled off. So, very good performance for the teams there. Some of it is structural with price hikes that teams have been able to land successfully in the market in the market. Some of it is also a little bit more more temporary, with very, very smart SKU management across the board and incentive management. What's also been very successful is Atherstack Pro attach rate, which came in at 94% for Q2 FY '27, and non-vehicle revenue, which came in at 15% overall. Overall, if you were to see the AGM and if I were to compare this to Q
Tarun Mehta (Ather Energy): FY '26. Q4 FY '26, two quarters ago, was 25.4%. Structurally, we have seen some gains, which is sustainable price hikes, VAVE work the teams have taken, cost reduction that teams have driven across the board. All of that put together has given us a 5.3% improvement in gross margin. Commodity inflations come much worse than we than we would have liked, at a 9.4% hit to gross margins overall. But very smart skew management by the teams have yielded and has created essentially opened up a new lever for us in the business and it's improved margins by 2.7% in Q2. Netting out Q2 FY '27 AGM at 24%, which is a 1.6% improvement over Q1 FY '27, I think. Roughly, yes. Overall H1 FY '27 AGM is at 23%. And all of this has given us a phenomenal operating leverage with EBITDA showing a 1,450 bps improvement year-on-year from minus 9.6% in Q2 FY '26 to positive 4.9% in Q2 FY '27. Even without other income, this was the first time our business registered positive EBITDA at, I think, roughly about 1% or 0.8% EBITDA. And I would be remiss in not acknowledging the first time our business hit positive PAT. Something definitely worth celebrating for us. I do want to call out, however, that we're not out of the woods. There's a lot of OPs for us to deliver on and PAT is not the not not the first thing to focus on. The real thing to focus on is top of top-line and improving volume will itself take care of a lot of things and is the right operating leverage to focus on. If that If if all the capacity work that we're putting in bears fruit well over the next few months, then I believe that PAT will take care of itself. In the near-term, PAT can go up and down, but definitely worth celebrating this milestone for the business this quarter. Okay, coming to obviously the the key thing that all of us are super excited and focused on is the new capacity coming live in Chhatrapati Sambhajinagar. So, AURIC Phase 1 is shaping up incredibly well. We've shared some pictures in the deck for your reference. The battery line, the vehicle line, the paint shop, all of that's coming together really well. Trial production is expected to start in the next few weeks, so very much on track for Q3 FY '27. And we expect to finish our CapEx installation and hence capacity installation by Q4 FY '27. It will take a couple of quarters for the installed capacity to be fully realized, but all of that's right now tracking very well and very much on track. I was there just a few weeks ago and the progress is honestly quite phenomenal. So, all of us are super excited at Ather for this. Coming to finally, a summary. Demand is up quite beautifully. Pre-orders are up 108%, registrations are up 60%, productions up 45%, all year-on-year. Important quarter for the industry with 11.6% E2W penetration, highest ever, and the first time it crossed into double digits at a quarterly level. Very strong growth in revenue from operations for the business. Very strong growth in gross margins despite almost, frankly, an unprecedented amount of commodity hits. And what we're excited about and looking forward to is the 11.4 lakh annual capacity, installed capacity, over the next few quarters that the team's working on right now. With that, let me just pause and open the floor for questions.
Moderator: Thank you, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Arvind Pirani with J.P. Morgan. Please go ahead.
Arvind Pirani (J.P. Morgan): Yes, hi. Thanks for the opportunity and congratulations on a good performance in a relatively tough time period. My first question is just you know some clarification on the capacity. You know because you know you are adding AURIC in Q4 and within AURIC Phase 1 itself, you are now you know adding more. By when should we expect that you will be able to realize this capacity because because I understand that while
Arvind Pirani (J.P. Morgan): you know, an existing plant and adding this 6k, you can, you know, realize it immediately. When you add such a new Greenfield, by when will you be able to ramp it up to this, you know, 6.5 lakhs? Will it be by 2Q itself or will it be more by like 4Q of next year?
Tarun Mehta (Ather Energy): Hi, Hemant. I will have to get back on specifically for the 12,000 units that we're increasing in Hosur Phase 1. But my estimate would be that even that will take a few months. Phase 1, the base capacity of 42,000 units will certainly take two quarters to ramp up. The additional 12,000 units that goes live in Q2 might ramp up a little faster. So, I I'm reasonably sure it'll ramp up within FY '28, but can't give you the exact month right now. But you're right. Hosur Hosur's ramp-up should be pretty rapid. So, we're expecting that to happen over the next, let's say, roughly, like later this quarter, and you will start seeing the results of that almost immediately on a daily basis from the end of the quarter itself.
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