Ather Energy Initiated With ‘Buy’ By HSBC, Nomura — Is This EV Stock A Must-Buy? Check Target Prices

Ather Energy Ltd., a leading electric vehicle (EV) manufacturer, has received a ‘buy’ rating from HSBC and Nomura, with the brokerages initiating coverage on the stock.

HSBC has initiated coverage with a target price of Rs 450, while Nomura initiated with a target price of Rs 458.

HSBC’s View on Ather Energy

HSBC highlighted Ather Energy as a good company in a tough industry, citing its product quality, technology leadership, and distribution expansion as key factors that will drive its market share in a tough market.

The brokerage noted that EV penetration remains low, but it expects the stock price to be driven by its relative performance, not industry growth.

HSBC forecasts a FY25-28 revenue CAGR of 47% and expects Ebitda breakeven by Q4FY27. It also forecasts a gross margin of 28% and an Ebitda margin of 4% by FY28, when the monthly volume run rate is expected to hit 45,000 units, up from the current 14,000 units.

The brokerage uses a discounted cash flow (DCF) model to value Ather Energy and its target price implies a FY27 price-to-sales ratio of 3.4 times.

Downside Risks

HSBC highlighted aggressive Honda EV ramp-up, weak EV penetration, and EL product failure as key downside risks.

Nomura’s View on Ather Energy

Nomura shared that Ather Energy is riding on electrification and premiumisation trends, with strong long-term growth potential at attractive valuations.

The brokerage estimates Ather’s gross margin will rise from 16.6% in Q4FY25 to 28% by FY28, which is in line with that of internal combustion engine (ICE) two-wheeler companies.

Nomura expects the company to turn Ebitda breakeven by mid-FY28 and margins to ramp up after this.

Ather Energy is Nomura’s top pick in the two-wheeler segment, with the brokerage highlighting the company’s ability to capture the opportunity in the EV segment, drive growth through new product launches and distribution expansion, and ramp up Ebitda margins as the production-linked incentive (PLI) scheme ends.

Nomura initiates coverage on Ather Energy with a target price based on 3.3 times EV-to-sales on average FY27-28 sales, which is also backed by its DCF valuation.