Nomura names Ather top EV pick, raises target to ₹1,470
Nomura has raised its price target for Ather Energy by nearly a third, citing an accelerating shift toward electric two-wheelers in India that is expected to drive the pure-play manufacturer to profitability by FY29.
Nomura has reiterated its 'Buy' rating on Ather Energy and increased its target price from ₹1,120 to ₹1,470, implying a 22.5% upside from the stock's previous close of ₹1,200. The brokerage designated the Indian electric scooter manufacturer as its top pick in the two-wheeler sector to capitalize on an impending surge in electric vehicle adoption.
The upgraded outlook hinges on a structural shift in India's two-wheeler market. Nomura now projects electric two-wheeler penetration will jump from 6.5% in the current financial year to 19% by FY30, up from a prior estimate of 16%. This revision translates to an expected volume compound annual growth rate of roughly 40% over the four-year period.
Ather is seen as a prime beneficiary of this demand because of its pure-play status and its upcoming expansion into the mass market. The brokerage highlighted that Ather held an 18% market share in FY26 despite supply constraints. A critical catalyst is the planned third-quarter FY27 launch of an affordable scooter built on the EL platform, targeting the crucial ₹1 lakh to ₹1.25 lakh price bracket, which represents 45% of the broader industry.
To reflect this growth trajectory, Nomura kept its FY27 volume estimate at 3.99 lakh units, a 53% year-on-year increase, while raising its FY28 forecast to 6.22 lakh units. It also initiated an FY29 estimate of 8.24 lakh units. Revenue is projected to grow 54% in FY27, 57% in FY28, and 36% in FY29, supported by a 2% increase in average selling prices as the company passes on commodity costs.
The path to earnings is a key focus for market participants. Nomura forecasts EBITDA margins will swing from a negative 6% in FY27 to positive 5.1% by FY29, with the company reaching profit-after-tax breakeven that same year. "Along with strong growth, Ather's premium positioning keeps long-term margin potential in the range of 15-20%, in our view," Nomura noted. The brokerage expects margins to improve further as production-linked incentive benefits currently available to rivals begin to expire.
The stock has already priced in some of this optimism, having surged 273% over the past year to hit a 52-week high of ₹1,222.10 and giving the company a market capitalization of nearly ₹46,480 crore. While Nomura lowered its valuation multiple to 5.5 times enterprise value-to-sales from 6 times to align with its FY28-FY29 estimates, it argues the current multiple of 4 times FY28 EV/sales remains compelling.
"We believe the current valuation at 4.0x FY28F EV/sales is attractive given the outlook. We maintain Ather as our top pick in 2Ws," the brokerage said. Nomura acknowledged it has factored in a moderation in EV demand as Middle East-linked fuel price risks have eased, but warned that if fuel prices remain elevated, its volume and revenue forecasts could face further upside.
