Ather Cracks Profitability In Q2, But Can It Sustain The Momentum?

Ather Energy crossed a major financial milestone in Q2 FY27. The listed electric-vehicle company reported consolidated net profit of ₹1.3 Cr. It had reported losses in both comparison periods. The change matters because Ather also became EBITDA-positive for the first time, showing improvement in its operating performance.

The contrast is sharp. Ather reported a net loss of ₹154.1 Cr in Q2 FY26. It also reported a ₹51.1 Cr loss in the preceding quarter. Its EBITDA margin improved to 4.9% from negative 9.6% a year earlier. Excluding other income, EBITDA margin was about 0.8% to 1%, while adjusted gross margin reached 24%.

Profitability is not yet Ather’s only priority. CEO Tarun Mehta said the company remains focused on adding capacity, increasing sales volumes, and strengthening revenue. Ather plans to invest ₹122 Cr in expansion, indicating that management sees growth and supply as central to sustaining the improvement.

EBITDA stands for earnings before interest, taxes, depreciation, and amortisation. It is commonly used to assess operating performance before financing costs, taxes, and certain non-cash accounting charges. For an electric-vehicle company, it helps show whether selling and making vehicles can generate operating earnings.

Ather’s milestone was especially notable because its EBITDA margin reached 4.9% in Q2 FY27, compared with negative 9.6% in Q2 FY26. Excluding other income, the margin was about 0.8% to 1%. This distinction matters because other income can support reported results, while operating EBITDA focuses more closely on the underlying business.

Becoming EBITDA-positive does not mean every financial challenge is solved. Ather’s CEO said the company is not yet “out of the woods.” It still faces capacity limits and raw-material cost pressure. It is prioritising factory expansion and higher sales volumes, while trying to preserve the margin improvement already achieved.

Ather is investing in production capacity because management identifies supply as a key limit on growth. The company plans to expand the combined capacity of its existing Hosur factory in Karnataka and its upcoming AURIC unit in Maharashtra. The addition will increase annual capacity by 2.25 lakh units.

The planned investment is ₹122 Cr. Hosur is already operating, while AURIC is expected to go live in Q4 FY27. Hosur currently has installed capacity of 35,000 units per month. Ather plans to add another 6,000 units per month there in Q3 FY27. These steps give the company a nearer-term capacity increase and a later expansion through AURIC.

Together, the projects should lift Ather’s total installed capacity to 11.4 lakh units by Q2 FY28. The target supports management’s medium-term plan to increase sales volumes and revenue. It also responds to unrealised demand, which Mehta estimated at 20,000 units per month in the previous quarter.

Ather believes limited supply, rather than weak customer interest, is restricting sales. CEO Tarun Mehta said pre-orders rose 108%, registrations increased 60%, and production grew 45% year on year. Those figures suggest demand and output are both expanding, but production is not yet sufficient to fulfil all potential sales.

The clearest example is the previous quarter. Ather sold about 33,000 units per month, while internal estimates indicated unrealised sales of 20,000 units per month. Because Hosur is already operating, its capacity can rise from 35,000 units monthly by another 6,000 units in Q3 FY27. That could provide an immediate supply boost.

AURIC offers the larger later step. Its expansion may take longer because the Maharashtra unit is scheduled to become operational only in Q4 FY27. Combined with Hosur, the projects are designed to raise total capacity to 11.4 lakh units by Q2 FY28 and support higher sales volumes.

Konarc is Ather’s recently launched mass-market electric scooter. The company designed it to attract mainstream buyers who might otherwise choose petrol scooters. Its importance goes beyond sales volume. Management sees Konarc as a product that can lower the customer’s effective price while protecting or improving gross margins.

The scooter includes practical features such as 14-inch front wheels, longer rear suspension, a metal body, a centre stand, and a 10-year battery warranty. It is already a few thousand rupees cheaper than Rizta on a like-for-like basis. Ather expects Konarc’s margins to improve by about 6 to 7 percentage points against Rizta over time.

This combination gives Ather flexibility. It could reduce the average ex-showroom price without hurting gross margins, provided commodity prices do not ease in a way that changes the calculation. The company is not planning a price hike unless costs rise further. Konarc therefore supports growth while helping Ather avoid sacrificing profitability.

Higher raw-material costs directly raise the cost of making electric scooters. Ather said elevated prices for aluminium, copper, and plastics hurt its gross margins by 9.4% during the quarter. This pressure can reduce the profit left from each vehicle unless the company raises prices, cuts other costs, or changes its product and sales strategy.

Ather used several responses. Price hikes helped offset the higher input costs and appear to have been accepted by the market. Management said about 5.3% of the margin improvement achieved over the previous two quarters was broadly structural, largely because those price increases landed well. It also managed products through SKU management and pulled back incentives or other support mechanisms.

Those latter measures are not unlimited. They contributed 2.7% of margin improvement between Q4 FY26 and Q2 FY27, but Ather can use them only for a finite period if costs and supply constraints remain elevated. If conditions ease, the company may restore incentives or offer more SKUs.

Electric-scooter companies turn sales into sustainable profits when revenue per vehicle consistently exceeds production, selling, and operating costs. Vehicle prices must cover batteries, metals, plastics, labour, logistics, warranty, and support. Factories also need enough utilisation to spread fixed costs across more scooters. EBITDA-positive performance is an important operating checkpoint, but cash flow still matters because expansion and working capital require funding.

Ather illustrates these mechanisms. Higher aluminium, copper, and plastic prices hurt gross margins by 9.4%. Price hikes, SKU management, and reduced incentives helped offset that pressure. Konarc may improve the product mix because its comparable price is lower than Rizta, while management expects margins 6–7 percentage points higher. More volume through Hosur and AURIC could also improve factory utilisation.

The current reality remains mixed. Ather became profitable, but Mehta said it is not yet “out of the woods.” Capacity constraints limit sales, and some margin levers are temporary. Sustainable profits will require sufficient demand, stable costs, efficient production, disciplined incentives, and enough cash to fund growth.