Ather records positive PAT as Q2 EBITDA margin reaches 4.9%

Ather recorded its first positive profit after tax, or PAT, in Q2 FY27, while earnings before interest, tax, depreciation and amortisation, or EBITDA, margin reached 4.9% from minus 9.6% a year earlier. The 1,450-basis-point improvement came despite a 9.4-percentage-point commodity-related hit to its reported gross-margin measure.

How did Ather reach positive PAT in Q2 FY27?

Ather reached positive PAT in Q2 FY27 through higher volumes, pricing, stock-keeping unit, or SKU, management, non-vehicle revenue and operating leverage. Management said EBITDA margin improved to 4.9% in Q2 FY27 from minus 9.6% in Q2 FY26, while EBITDA excluding other income was also positive at roughly 0.8% to 1%.

The reported gross-margin measure, referred to by management as AGM, was 24% in Q2 FY27. That was 1.6 percentage points higher than Q1 FY27, but below the 25.4% reported in Q4 FY26. Management cautioned that PAT can move up or down in the near term and said topline growth and higher volume, rather than PAT alone, remain its operating focus.

Wholesale volume increased to 93,000 units in Q2 FY27 from 65,000 units in the prior-year quarter, while registrations rose to 92,500 units from 57,000 units. Management also said production increased 45% year-on-year, supported by average monthly manufacturing capacity rising to 33,000 units in Q2 FY27 from 28,000 units in the preceding quarter.

What offset commodity inflation at Ather?

Ather offset commodity inflation with price increases, SKU management and cost action, although these measures did not fully eliminate the input-cost effect on gross margin. Its weighted average ex-showroom price, including Ather Pro Pack sales, rose by Rs 14,000 to about Rs 1.64 lakh in Q2 FY27 from roughly Rs 1.50 lakh in Q4 FY26.

Management attributed 5.3 percentage points of gross-margin improvement versus Q4 FY26 to sustainable price increases, value analysis and value engineering, or VAVE, and other cost reductions. Commodity inflation reduced margin by 9.4 percentage points, while SKU management added 2.7 percentage points. The resulting 24% Q2 FY27 AGM was therefore 1.4 percentage points below the Q4 FY26 level.

Management identified aluminium, copper, plastics and memory as the inputs that performed worse than expected during Q2 FY27. It linked higher copper prices to US pre-buying and artificial-intelligence demand, plastics disruption to the Hormuz crisis, and said memory remained expensive with no near-term solution visible. Management described the broader commodity impact as temporary, while acknowledging it had lasted several quarters longer than expected.

Will Ather raise prices again in Q3 FY27?

Ather is not planning further price increases in Q3 FY27, according to management. Management said it intends to hold current prices for the next few quarters while Konarc stabilises and additional manufacturing capacity becomes available, preserving flexibility to grow without discounts.

Management said commodity costs appeared broadly flat in the weeks before the call and it had not seen a trend indicating that Q3 FY27 would be worse than Q2 FY27. However, it also said the commodity environment remained volatile. The decision not to raise prices applies to the current portfolio and is not a formal long-term pricing commitment.

Konarc could provide an affordability and margin lever because management said its current unit economics are better than Rizta's. Management said this could allow Ather to reduce the average ex-showroom price experienced by customers without reducing absolute gross margin, even if commodity costs do not decline. It presented that as a high-level assessment, not quantitative guidance.

AtherStack Pro supported the Q2 FY27 revenue mix, with a 94% attach rate, while non-vehicle revenue accounted for 15% overall. Management said early AtherStack Pro attachment for Konarc was as strong as for Rizta. It interpreted this as evidence that mainstream scooter buyers, rather than mainly motorcycle buyers, are paying for product features, quality and software.

Can Konarc and new capacity support further volume growth?

Ather expects Konarc and planned capacity additions to support further volume growth, but the ramp-up remains dependent on execution. Konarc had only one month of sales in Q2 FY27, September, and fewer than 10,000 units had been sold by quarter-end. Management said early market response in Rajasthan and Uttar Pradesh was positive but did not disclose incremental booking figures.

Demand indicators increased faster than industry search activity in Q2 FY27. Ather said its searches rose almost 94% year-on-year, compared with roughly 34% growth for electric-vehicle industry searches. Inquiries rose 109% to more than 10 lakh, while pre-orders increased 108% to about 1.8 lakh.

Management estimated that existing stores had roughly 20,000 units a month of unrealised retail demand, against average production of 33,000 units a month in Q2 FY27. Konarc was initially released in Uttar Pradesh and Rajasthan before expansion into Madhya Pradesh, Bihar, Maharashtra, Gujarat and Punjab, with southern-market availability planned after AURIC begins operations.

Hosur had 35,000 units of monthly capacity, while AURIC Phase 1 is expected to add 42,000 units a month after installation is completed in Q4 FY27. Ather has approved a further 6,000 units a month at Hosur for later in the current quarter and an additional 12,000 units a month at AURIC Phase 1 by Q2 FY28. These additions are intended to raise annual installed capacity to 11.4 lakh units by Q2 FY28 from the previously expected 9.2 lakh units.

What could affect Ather's profitability next?

Sustained inflation in aluminium, copper, plastics and memory is the principal disclosed risk to Ather's profitability. The 9.4-percentage-point commodity impact in Q2 FY27 exceeded the 5.3-percentage-point gain from pricing, VAVE and cost reductions. Management therefore said the positive-PAT milestone does not mean operating challenges have been resolved.

The AURIC ramp is the second material execution item. Trial production at the Chhatrapati Sambhaji Nagar facility was expected to start in the next few weeks, putting it on track for Q3 FY27, while capex installation was expected to finish in Q4 FY27. Management said the base 42,000-unit monthly capacity would take about two quarters to ramp.

Management could not provide an exact month for the ramp of the additional 12,000 units a month planned at AURIC in Q2 FY28. It said that incremental capacity should ramp within FY28, while the 6,000-unit Hosur addition should be realised rapidly after it goes live later in the current quarter. The timing matters because management sees current demand in the 50,000-to-60,000-unit monthly range.

Conclusion

Ather's Q2 FY27 result combined its first positive PAT with a 1,450-basis-point year-on-year EBITDA-margin improvement and 42% wholesale-volume growth. Price increases, VAVE, SKU management and non-vehicle revenue helped counter commodity inflation, but the 24% reported gross-margin measure remained below the 25.4% level recorded in Q4 FY26.

The next items to watch are trial production at AURIC in Q3 FY27, completion of AURIC Phase 1 installation in Q4 FY27 and the two-quarter ramp of its base 42,000-unit monthly capacity. Management's plan also includes a 6,000-unit monthly Hosur addition later in the current quarter and a further 12,000-unit monthly AURIC addition by Q2 FY28, alongside Konarc's phased rollout.