Ather Energy's Q2 FY26: Accelerating Growth and Path to Profitability

Ather Energy Limited, a prominent player in India's electric two-wheeler (E2W) market, has reported a robust performance for the second quarter of Fiscal Year 2026 (Q2 FY26). The company achieved its highest-ever quarterly revenue, reaching INR 940.7 crore, marking a significant 57% year-on-year (YoY) and 40% quarter-on-quarter (QoQ) growth. This impressive financial uptick was underpinned by a substantial 67% YoY increase in unit sales, totaling 66,000 units. Notably, Ather Energy also made considerable strides towards profitability, with EBITDA losses narrowing to less than negative 10%, an 1,100 basis points (bps) improvement YoY and 600 bps QoQ, marking the first time the company achieved single-digit EBITDA losses in any quarter. This performance underscores Ather's effective operational execution and sustained growth momentum across its expanding geographical footprint and diversified product portfolio.

The company's revenue mix highlights a growing ecosystem-led business model. While vehicle sales remain the primary contributor, non-vehicle revenue, derived from software subscriptions, charging services, accessories, spares, and after-sales service, contributed a healthy 12% to the total income in Q2 FY26. This diversification reflects the increasing value derived from Ather's integrated ecosystem, reinforcing its leadership in software-defined electric vehicles. Adjusted Gross Margin (AGM) also saw a significant improvement, standing at 22% in Q2 FY26, up 300 bps YoY, driven by value engineering and a rich product mix. This consistent margin expansion, coupled with disciplined financial management, positions Ather strongly on its path to sustained profitability.

Strategic Expansion and Market Leadership

Ather Energy's Q2 FY26 performance was significantly bolstered by its aggressive distribution expansion strategy. The company added 78 new Experience Centres (ECs) during the quarter, bringing its total retail presence to 524 ECs across India. This expansion is a testament to Ather's balanced approach, targeting both established metro markets and emerging tier-2 and tier-3 cities, facilitated by modular retail formats that enhance cost efficiency and accelerate breakeven timelines. The company is on track to achieve its ambition of nearly 700 stores by the end of FY26, further solidifying its national presence.

Market share gains were a standout feature of the quarter. Ather's Pan-India market share reached 17.4% in Q2 FY26, a notable increase from 12.1% in Q2 FY25 and 14.3% in Q1 FY26. The company maintained its leadership in South India with a 25% market share, reflecting strong brand preference and customer trust. Middle India, encompassing states like Gujarat, Maharashtra, Madhya Pradesh, Chhattisgarh, and Odisha, emerged as the fastest-growing region, with market share rising to 14.6% from 8.8% YoY. Even the Rest of India recorded strong growth, reaching 10% in Q2 FY26, with significant gains in Jammu & Kashmir, Punjab, and Rajasthan. This broad-based growth across geographies underscores the effectiveness of Ather's targeted expansion and marketing efforts.

Innovation and Product Portfolio Evolution

Ather Energy's commitment to innovation was evident through several key product and technology launches. The company addressed a portfolio gap by introducing new variants of the 450S and Rizta S with higher ranges (approximately 160 km each), catering to the low-tech, high-range segment. The launch of 'Battery as a Service' (BaaS) for the Rizta S, starting at INR 75,999, aims to reduce the upfront cost of ownership and make electric scooters more accessible to a broader mainstream audience, providing crucial comfort to customers regarding battery longevity and resale value.

Ather also unveiled its new generation EL scooter platform, designed for enhanced versatility, safety, convenience, and cost optimization. This platform will feature larger wheels, an Advanced Electronic Braking System (AEBS), and the Ather Charge-Drive Controller (AC/DC), which integrates charging and motor control. The AC/DC is expected to enable onboard charging, significantly reducing the size and weight of portable chargers, thereby enhancing user convenience. This platform is poised to deliver a much stronger improvement in gross margins and is scheduled for launch next year.

Furthermore, the company rolled out AtherStack 7.0, its latest software generation, introducing features like Infinite Cruise, Pothole Alerts, Crash Alerts, ParkSafe Alerts, and Voice commands. This software suite has seen an impressive 89% attach rate for AtherStack Pro, contributing 12% to non-vehicle revenue, highlighting Ather's leadership in software-defined EVs. The charging infrastructure also saw an upgrade with a new 6-kilowatt fast charger, which is twice as fast as previous models, smaller, and more cost-effective. The Ather Grid network expanded to 4,322 fast-charging points globally, enabling intercity rides and further strengthening the EV ecosystem.

Path to Profitability and Future Outlook

Ather Energy's Q2 FY26 results clearly demonstrate a strong trajectory towards profitability, driven by consistent operational execution and strategic initiatives. The narrowing EBITDA losses and improving gross margins reflect the benefits of scale, value engineering, and a growing contribution from non-vehicle revenues. Management transparently addressed challenges such as a one-time impact from a rare earth supply crunch affecting Q2 subsidies and a delay in the new manufacturing plant, providing clear explanations and mitigation strategies.

The company's strategic focus on expanding its distribution network, particularly in Middle India, and continuously innovating its product portfolio with offerings like the EL platform and BaaS, positions it well for sustained growth. Ather anticipates positive tailwinds on the revenue front over the next year, even with the final subsidy removals, due to strong unit economics. The management expects electric scooters to grow at 2x to 2.5x the overall scooter market, translating to a 4x to 5x faster growth than the overall two-wheeler industry. This strategic clarity, coupled with disciplined execution and a robust product pipeline, reinforces investor confidence in Ather Energy's long-term growth and profitability potential.