HDFC Securities has initiated coverage on Ather Energy with a ‘Buy’ rating. The brokerage has a target price of Rs 409, a potential upside of nearly 31%. The broker expects Ather Energy to be a key player in the electric vehicle (EV) transition and a pure-play opportunity in the segment.
Here are the key factors behind why HDFC Securities’ bullish call on Ather Energy-
HDFC Securities on Ather Energy: Expects to remain a leading player in EV transition
The domestic brokerage firm is confident that Ather Energy is positioned to be one of the top players as India transitions towards EVs. The company plans to rapidly expand its dealership network, building on the 86 stores added in Q4FY25. It aims to add approximately one new dealership a day in FY26. This expansion is the “right ingredient for scaling up.”
“We strongly believe that Ather Energy will remain one of the leading players through the EV transition. It provides a good EV pure play opportunity for investors to invest in the Indian EV transition story,” said HDFC Securities in a research note.
HDFC Securities on Ather Energy: Opportunity for EV pure play investment
The company offers investors a direct opportunity to invest in India’s EV transition story, a pure play for a dedicated EV investment. As a “pure play,” Ather Energy’s business is exclusively centred on electric vehicles, specifically electric two-wheelers, unlike traditional automobile manufacturers. According to HDFC Securities, for investors seeking direct exposure to the EV sector without the complexities of a diversified auto portfolio, Ather Energy presents a clear investment vehicle.
HDFC Securities on Ather Energy: Nascent stage of India’s EV transition
India’s EV market is still in its early stages, presenting a timely opportunity to invest in a company that could emerge as a strong leader during this significant industry shift. HDFC Securities put this as the EV transition is currently in its “nascent stages”. This early phase is considered a strategic time to “invest early in what could emerge as one of the strong leaders of the transition.” The brokerage in the research report drew parallels to successful global EV players, suggesting that being an early participant in a transforming industry can yield good returns.
HDFC Securities on Ather Energy: Product-focused approach
Ather Energy prioritises a product-focused approach, which has allowed the company to become a technology leader in the electric two-wheeler (e-2W) segment. Ather’s electric scooters are considered to be “on par, if not superior, to products of market leaders like TVS Motor and Bajaj Auto.”
HDFC Securities explained that R&D is Ather’s “key strength”. The company plans to allocate Rs 750 crore from its IPO proceeds specifically to R&D investment. Also, the company is exploring the use of rare-earth-free motors to reduce dependence on rare earth metals and further lower costs, especially given recent restrictions on exports from China.
The company has been “the first to market with many advanced technology features”.
HDFC Securities on Ather Energy: Long-term leadership potential
As Ather Energy invests a lot in upgrading its products, this product-focused approach positions it well to maintain a strong leadership position in the e-2W space over the long term. The ability to offer “superior products” is seen as a key driver for outgrowing the industry, especially as the e-2W market matures and potentially undergoes consolidation. The firm projects Ather’s EV 2W market share to grow to 25.2% in FY40 from 13.5% in FY25, expecting it to be among the “top 3 players” alongside TVS Motor and Bajaj Auto by FY40.