Nomura Doubles Down on Ather Energy: Retains 'Buy' Rating and Jumps Target Price to ₹1,470 Amid EV Inflection Point

Nomura Doubles Down on Ather Energy: Retains 'Buy' Rating and Jumps Target Price to ₹1,470 Amid EV Inflection Point​

Nomura has significantly upgraded its outlook on Ather Energy, maintaining a "Buy" rating while raising its target price from Rs 1,120 to Rs 1,470. The brokerage declared Ather the "top pick to ride on EV inflection," driven by the growing market maturity and strong consumer interest within India's electric two-wheeler (EV) segment.

Why Nomura Sees an Inflection Point in Indian EVs​

Nomura’s report underscores that the market is reaching a critical turning point for EV penetration in India. This surge is attributed to robust consumer enthusiasm, which is being strongly supported by supportive policies enacted by both the central and various state governments.

The brokerage projects aggressive growth in this sector. It estimates that electric two-wheeler penetration will rise from approximately 6.5% in FY26 to nearly 19% by FY30. This projection implies a substantial volume Compound Annual Growth Rate (CAGR) of around 40% between FY26 and FY30.

Operational Strength and Future Catalysts for Ather​

As a "pure play on EV 2W," Nomura believes that Ather is well-positioned to be a principal beneficiary of this market trend. The company has maintained a significant market share, estimated at around 18% in FY26, while currently facing supply constraints—a testament to strong demand.

Ather's future roadmap holds key catalysts for sustained growth. A major highlight is the launch of its affordable scooter under the EL platform, scheduled for the third quarter of FY27. Furthermore, a new plant construction initiative is expected to address the vital Rs 1 lakh to Rs 1.25 lakh segment, which accounts for roughly 45% of the overall industry.

Revenue and Margin Trajectory Forecasts​

Reflecting this improved market stance, Nomura has substantially boosted its volume forecasts. The FY27 volume estimate is set at 3.99 lakh units, marking a 53% year-on-year increase. For FY28, the forecast rose to 6.22 lakh units from a prior estimate of 5.10 lakh units, and an FY29 target has been introduced at 8.24 lakh units, representing a 32% jump.

The financial forecasts remain positive across the board. Nomura expects revenue growth rates of 54%, 57%, and 36% for FY27, FY28, and FY29 respectively. While noting that the company is navigating a "weaker mix," the brokerage anticipates average selling prices will rise by approximately 2% due to necessary price hikes aimed at offsetting commodity costs.

Path to Profitability and Valuation Update​

The brokerage projects significant margin improvement over the next few years, with EBITDA margins expected to climb from negative 6% in FY27 to a positive 5.1% by FY29. Crucially, Ather is expected to achieve PAT breakeven during FY29. Nomura notes that strong margin improvements could be accelerated in FY29 as PLI incentives for competitors conclude.

Ather’s premium positioning allows for long-term margins in the range of 15% to 20%. While lowering its valuation multiple to 5.5 times EV/sales from 6 times (as it rolls forward to FY28-29 sales), Nomura affirms that the current valuation of 4 times FY28 EV/sales remains attractive given the market outlook.