Ather Energy (NSE:ATHERENERG) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the ATHERENERG Limited Q1 FY 'twenty seven Results Conference Call. As a reminder, all participants will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I will now hand the conference over to Mr. Murali Seshidharan, Head of Communications at ATHERENERG. Thank you, and over to you, sir. Thank you. Good evening, everyone, and welcome to ATHERENERGI Limited Q1 FY twenty twenty seven Earnings Conference Call.

0:46 From the management team, we have with us today Mr. Talan Mehta, Executive Director and Chief Executive Officer and Mr. Sohail Parekh, Chief Financial Officer. Before we begin, let me draw your attention to the fact that today's discussions may include certain forward looking statements, which are predictions, projections or other estimates about future events. These statements reflect management's current expectations about future performance of the company and are subject to various risks and uncertainties that may cause actual results to differ materially. With that, I would like to request Mr. Tarun Mehta, Executive Director and CEO, ATHERENERGI, to share his opening remarks.

1:34 Following his comments, we will open the forum for Q and A questions. Over to you, Tarun. Thanks, Moli. So welcome, everybody. Welcome to our first earnings call for FY 'twenty seven. We're doing this call in the midst of a pretty massive change and pretty massive transformation for the EV industry, which is reflective in the overall eTooler penetration. For a while, people were wondering if eTooler penetration had slowed down or if it was not growing fast enough. We've been guiding for the last few quarters that underlying demand is strong and there is growth that we are seeing. But in the last three to four months, given larger macro shifts, numbers have really changed.

2:23 ETooler penetration is up by 44% at 11% in the tool industry and electric penetration in the scooter industry is upwards of, I believe, 25% now. There's also reflective in how searches have gone up. If you look at an industry level, EV searches for electric vehicles are up almost 75% and ATHER brand searches are up almost 118%. What's underpinning all of these are some macro shifts. First, transport electrification as hailed by the Prime Minister himself is now accelerating as a national agenda. We've got to electrify cooking and transport and this is really making this mission mainstream today. Second, there is very clear and strong policy support. Obviously, PM e drive that has always been around, but the recent announcements and the plans with the Delhi EV policy, I think they are playing a pretty massive role in driving consumer confidence in electric vehicles up.

3:22 We believe that if this policy plays out positively as it looks like now, this will have a pretty massive impact across multiple states. Third is, and this is an interesting one, there are now availability concerns on petrol and diesel, and they are shifting consumer sentiment. There was a point, I remember a few years ago when somebody would even our diehard EV family would always say that we are now moving to a place and this was a fun colloquial thing, a fun thing that I heard, really capturing the sentiment in a beautiful manner.

4:08 It's not petrol prices that have shifted demand up. People are moving towards electric because for the first time probably ever, people generally fear how accessible and available fossil fuels would be. Electricity is seen generally as a more available commodity than petrol today. And this is why the demand is now starting to surge. And finally, obviously, you can't deny this. Rising petrol prices in India particularly are definitely improving the overall total cost of ownership for electric vehicles. So these are four macro shifts that are really driving structure become really structural tailwinds for our industry today. Every demand proxy that you can think of is inflecting upwards. Industry registrations are up 68% in the last one year, hitting five twenty five ks in Q1 twenty twenty seven.

5:00 Inquiries for ATHER that we are receiving on a daily basis, they are up 95% in the same time. In Q1 twenty twenty seven, we received more than seven lakh inquiries for our products. And ATHER preorders, these are paid preorders that are captured across the country. They were up 158%, hitting first ever seen 1.5 lakh preorders in Q1 twenty twenty seven, really capturing how massive the demand for our vehicles for electric vehicles in general and ATHER particularly has been in recent times. And this is reflecting in very strong financial results. For example, our wholesale volume grew 81% from 46,000 units in Q1 FY twenty twenty six to 83,000 units in Q1 FY twenty twenty seven.

5:49 This has happened despite production constraints and multiple supply challenges during Q1. We were navigating the labor crisis, the West Asia war induced crisis at the start of the quarter, which is why April volumes were still soft, April production was still soft at 24,000 units. But we have month on month ramped up from 24,000 units in April, 28,000 units in May to 31,000 units in June. Our current facilities have a max production capacity of 35,000 units. And I'm happy to announce that we are almost at 100% utilization as we speak now. So the ramp up took a couple of months, but we are now there. And this surge is best captured when you see our year on year registration growth. So year on year wholesale growth was 81%, but year on year registration growth was even sharper at 102%.

6:39 Registrations for ATHER grew from 44,900 units in Q1 to more than 90,000 units in Q1 FY 'twenty seven. In fact, this is once again another quarter where retail has outpaced wholesale, driving the urgency and the need for us to ramp up both supply and capacity on award footing. In sales, Middle India continues to be our growth driver, driving the highest growth among all zones for us. Middle India are the five zones of Gujarat, Maharashtra, Impiccathisgarh and Odisha, which grew 141% in retail from Q1 last year to Q1 this year, followed by rest of India at 118%, followed by South India at 76%.

7:26 Just to give context about where demand is and how big the opportunity for the industry and ATHER today is, we have this slide in the presentation also where we have shown how inquiries have ramped up, how preorders that we are capturing have now crossed 50,000 on a monthly basis. And may I just call out, this is 50,000 preorders despite the fact that in many states now our dealers are no longer even accepting new preorders because the waiting times are now hitting two months or even higher. So the underlying demand we strongly believe is very, very, very high. We believe today that of the 30,000 units that we retail average in Q1, we could have probably sold an incremental 13,000 to 15,000 units extra every month.

8:15 That's unrealized retail potential for us. And this unique it's bittersweet situation to be in because obviously a brand would want to be in a place where they are where they have more demand than they can say to it. And this is best captured by looking at our dealer channel inventory. Our dealer stocks are down from fourteen days to now three days as of Q1 FY 'twenty seven. So how do we solve for this new demand reality? Our current production out of Hosur maxes out at 35,000 units per month or about 4.2 lakh units per annum, which is roughly where we are already now getting into in Q2. We've already invested we are in the midst of finishing our investment in Aurangabad, Chattopadish and Bajanagar, which is a new factory. Phase one of this new factory unlocks five lakh units, which is what we are all laser focused on.

9:12 Go live of ORIC will take our total capacity up from 4.2 lakh units to 9.2 lakh units later this calendar year. But we believe demand is ramping up very fast. 9.2 lakh units per annum is only 77,000 units a month. We believe on current demand trajectories even this may be tight in the coming quarters, which is why I think we were lucky here. When we took Aurangabad land, we took larger land capacity and we had always planned for Aurig Phase 2. And there are some common facilities already that were planned for. With Auric Phase 2, we can incrementally add another five lakh annual capacity, taking a total capacity up to 14.2 lakh units in the coming time. We haven't started any investments for Auryk Phase II, but that presents a captureable opportunity by us should the current demand trajectory continue to ramp up, which we are quite bullish about. Also to fund it, recently we finished closure of our INR 1,300 crore QIP a few weeks ago with very strong participation from funds both from India and abroad.

10:19 We are also in the midst of seeking shareholder approval and closing a fund raise of another INR 1,200 crore via our preference issue, leading to a total fundraise of INR2500 crores. This cash raise will serve us well as we respond to the fast tracking that we need to do for this capacity, both at our end and our suppliers' end. It will also help us as we will likely have to fast track launch of new products because the market certainly is expanding faster than anybody anticipated and will also give us the balance sheet resilience to be able to navigate some of the commodity crisis and the supply crisis that continue to exist globally. Coming to challenges, there have been headwinds also, while there have been very, very strong tailwinds.

11:05 In the headwinds, the first one is the commodity challenge, which we've been highlighting for the last 0.5. Q1 'twenty seven was not immune to it. We saw an escalation in commodity costs across the board. The commodity index in the last five quarters has gone up by 46% for us, which is what we had roughly guided by last quarter also. In fact, in many ways, the hit from commodity cost was probably a little higher than even we anticipated in Q1. We do believe that there is still some more risk in the coming months of it escalating a bit more, But we are hopefully near the top rather than near the bottom right now. So hopefully, the pain is not going to compound for too long.

11:52 To manage this, we've focused a lot. We obviously are increasing capacity and that will be a big, big help as we can sell more. But in the near term, every crisis can open up some opportunity. We saw that many years ago when the pullback of subsidies pushed us at Ather to discover new monetization opportunities by things like ATHERSAK Pro. The current commodity crisis has definitely pushed us again, which reflects in how we've been able to navigate pricing. Happy to report that our teams have been able to drive very strong success on both added sales price increase and improved SKU. The average sales price of ATHER has now hit 1.61 lakh across the country, up from about INR 1.5 lakh units INR 1.5 lakh as of last quarter. So there's been a sharp increase there. This is a mix of A, price hikes, which the market has been able to absorb and b, improved SKU management on the ground.

12:56 This is also reflective of the fact about how much pricing power the ATHER brand today commands and how much respect and confidence our customers continue to have in us on our quality, on our products and overall brand promise. So this hands down is probably the strongest success story for Ather in this quarter. All of this was also supported by very strong ATHERSAT pro attach rates, which which have gone up even this quarter. We saw 94% ATHERSAT pro attach rates last in Q1 twenty twenty seven. So if I see the overall gross margin adjusted gross margin story, ADM story, we exited Q4 twenty twenty six at 25.4%.

13:43 There were structural gains that we were able to bake in between the price hikes, between SKU management, between ATHER Stack Pro attach rates, cost reductions and many others. These are structural gains because most of it will survive even the current commodity crisis. In fact, all the structural gains are not fully accounted for because as you as I talked about the price hikes, the price hike of the ASP increase of 1.61 lakhs happened by the end of Q1. So there is still some more upside that we will continue to benefit out even in Q2. So this is the structural gain that we have gotten out of this entire episode. Obviously, canceling it out or more than canceling it out is the near term commodity inflation that we're dealing with, which led to a 5.6 drop in gross margins.

14:34 Net it out, we've landed up at 22.4% AGM for Q1 'twenty seven, a fairly respectable place, particularly looking at how strong the commodity hit was. But particularly, the good news, the silver lining in this is the structural gains will likely continue the commodity inflation will likely last the commodity outlast the commodity inflation cycle also. And which brings us to the big financial success of this quarter. Despite the commodity crisis, despite that pressure, we were able to manage our gross margins well. But more importantly, teams delivered an astounding amount of discipline on fixed costs, recognizing the strong demand that our products already had.

15:27 We were able to keep a really run a really tight ship on fixed costs, particularly marketing and sales and deliver our first ever positive EBITDA quarter. EBITDA came in at a INR 9 crore margin for Q1 'twenty seven, which is roughly about 0.8%. It's a small number, but this is the first time ever we have delivered one, so very happy to report it. Challenges do continue for the coming quarters. So there can still be some there will likely be, in fact, some ups and downs. But don't want to miss out on the opportunity to call this out when it does happen, which is a positive EBITDA quarter. So I spoke a lot about where growth is coming from and how strong demand is looking like how strong demand is overall looking like. Coming to the next big driver of growth hopefully for us and big driver of demand is our EL scooter platform.

16:19 This is something that we had unveiled last year and we are now getting ready to launch. EL scooter is already under production. High volume trials have already begun. SOP has already begun. Homologation is already completed. Production has begun out of our Hoshul facility for now and will run for this from here for a few months before it starts scaling up out of Aurangabad. We are looking at scaling up our manufacturing capacity for the EL scooter to about 60,000 units per month between Aurangabad and Hosur together. Obviously, it will not be called EL, it will be called it will have a brand name. We'll be unveiling the brand name in a couple of days, so please do watch out for it. And finally, the product is currently unveiled in our upcoming ATHER Community Day, which has now become an annual affair.

17:10 It's happening in August 29 in Bangalore, and we look forward to seeing many of you there this time. Between yes, right. Going ahead, to deliver all this demand that we're already seeing and Yale will likely bring in, the most critical piece now is the launch of our Factory three point zero out of Aurangabad or Chakrabadisham Bhaji Nagar. We've shared a picture in the presentation outlining the progress on the site. It's tracking well for a go live by later this calendar year. Assembly line is already has already been set up and warehouse and utilities are coming up as we speak. Paint shop is under trial. So things are looking good for the go live in the coming few months.

17:57 Finally, coming to the fun event we're all excited about, ITH Community Day. The theme for this year is a new dawn of magic, which really strong correlation to the product that we will be launching, the EL scooter that we'll be launching. It will be happening in KDPO in Whitefield, Bengaluru. And we'll have a slew of announcements. The big ones, obviously, would be the launch of the scooter, but there will also be many announcements around the software stack, around charging infrastructure and many other ownership products. With that, we are at the end of my section. In summary, demand is up incredibly. Demand has really gone in a very different orbit altogether, up 158% compared to same time last year.

18:47 And EL launch later this month should further set us up for an even stronger demand in the coming quarters. Registrations, which is retail for us, up strongly at 102%, supported enormously by really strong per unit revenue in Q1. And finally, production also up 79%, but the big upside here is awaited with Factor 3.0 going live in Q3 FY 'twenty seven. With that folks, at the end of my session, we can now open this up for Q and A. Thank you. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch tone telephone.

19:32 If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take the first question from the line of Amin Pirani from JPMorgan. Please go ahead. Yes. Hi. Thanks for the opportunity and congratulations on a strong number even in a quarter which had so many challenges. So my first question is actually on the margin itself. You did mention that commodity headwinds could continue. So are you seeing a similar 5% to 6% further commodity headwind that you saw in this quarter? Or are you thinking more like it will be stable at these levels and then hopefully come down at a later part of the year?

20:31 Thanks, Aman. I expect commodity hit to continue inching up because do remember, these are quarterly average numbers. So they don't probably fully capture the hit from commodities that we would have seen by the end of the quarter. But I'm also not expecting like a 56% further drop from here. So do expect like you guided we've not guided, we've called out that the hit in this quarter was roughly about 5.6%. I would say there's probably another couple of percentage points worth of risk left. There's also a possibility that this could start cooling, but that's extremely volatile and difficult to exactly predict when that happens. But if nothing else changes, maybe there is still 100 bps to 100 bps of further hit left, for which I think if we've been able to absorb this, I'm more optimistic about absorbing or largely managing the rest because EL itself will start lowering our cost structures in the coming quarters and annual cost reductions will in U. S. Play a strong role.

21:33 Sure. And even on your employee and other expenses line, you've shown remarkable cost control. So is this a new baseline and then EL helps us because I think when the new capacity comes in, these costs will go up, right? So before the new capacity comes up, is this the new baseline? Or was this quarter something exceptional that you did to control the costs, which can go up in the future? Well, I wouldn't call anything exceptional. By DNA, we have generally run a tight ship, and we've been always fairly cautious. This year, even internally, our messaging was very clear that we have had a blowout year in FY 'twenty six. But FY 'twenty seven, we've got to be cautious. So we've managed all expenses carefully.

22:22 We've not been overly generous there. So that's true. But overall, I think it's a story of multiple cautious eyes landing this year. So nothing exceptional that we have done. It's not like a onetime thing that happened here or some additional positive surprise that's kicked in. When as ORIX starts going live, yes, there will be a cost that will go up. It will not go up immediately because some of that cost will likely capitalized. But expect Q4 onwards, that cost to come in. But by the time you'll see that cost hitting our P and L, will also likely see volume output out of it. So net net, you may not see a meaningful shift in overall numbers. And just one last thing from my side. Are you expecting to hit a full ramp up in ORIC Phase one by March?

23:16 Or is that something which will happen sometime in fiscal year twenty eight? I mean, would like to hit in March, but honestly, to predict the exact month. So could spillover into the first few months of FY 2028. But you can imagine the kind of pressure we've created for ourselves with this demand. Everybody is completely focused and incentivized only and only to get Auric live, go live as quickly as possible. Okay. Great. All the best for that and thank you for the opportunity. Thanks, Ather. Thank you. We take the next question from the line of Kapil Singh from Nomura. Please go ahead. Hi. Good evening, team, and congratulations.

24:01 Firstly, just on the demand side, you know, we have hit our ASP of 160 k now. It's firmly in the premium motorcycle segment category. So just wanted to understand what is the customer profile and demographics? Any insights you may want to share? Is the market shifting towards scooters? And your views on that would be helpful. Hi, Gavil. Thank you for reminding us that of this interesting success. No, I was just checking with the team here while you were asking a question. No, our teams on long don't believe that the customer profile has changed.

24:47 It's basically the same customer. There is definitely some role of limited supply at play here, no doubt about it. That's definitely particularly helping us push the SKU in the direction that we like. But overall, we don't think the underlying customer profile has changed radically. Is it the motorcycle buyer buying a scooter today? We also don't think so. We think it is largely still the same scooter buyer. What has to be called out is the continued success of retail finance in our overall scheme of things, which is really helping customers absorb this cost in an easier way. See, because you do appreciate this, you would appreciate this that the TCO gain of electric is becoming incredibly powerful.

25:36 So as Mohan so though I listed that as a fourth point in the structural tailwinds, it does help a lot towards this factor that what an extra INR $58,000 is probably fine because that's like maybe INR $102,100 extra per month. But the petrol savings are just like enormous at this point. That coupled with the E2O concerns overall, I think create an environment where customers don't mind paying a little bit more for an EV because they are starting to appreciate the TCO quite a lot more now. Okay. Second question was on the margin side. What is happening on the PM eDrive subsidy? And with the price hikes that you have taken, have they been able to cover up for the cost increases when we look at Q2 and beyond?

26:28 So we've been hearing that we've been hearing an intent by the government to find a way to extend PME drives to continue supporting the larger electrification drive that they've been behind. As of now, we don't have one. We are awaiting clarity on it. But signs are strong is all I can say. And have the price increases covered the inflation that we have seen in commodities? No, I won't say they're fully covered because if they had, we would have seen we would have seen no margin loss at all. But there is one upside, which is that though I did say to Aman in the previous question that I expect commodity inflation to increase a little bit more for another quarter, the reality also is in the structural gains bucket, our price hikes haven't been fully factored in, in Q1 because our price hike happened actually reasonably backloaded.

27:25 So there is some more upside that will hit us from there also. So for Q2, we may be in a decent position now on canceling the effect of commodity hikes. But yes, but we'll not fully capture on. We'll have to wait for commodities to cool down. Yes. But subsidy is one element we will need to watch for, right? Because you would have got almost for the full quarter in Q1. Actually, no, even for Q1, we didn't bake subsidies for the full quarter. Roughly about 15% to 20% of the vehicles may have been sold without subsidy. I'll just reverify the exact numbers, maybe more. For Q2, we'll have to see if subsidies are announced. Right now, as we speak, we don't know. Okay. Okay. And I just finally wanted to check any thoughts given to ORIC Phase II.

28:15 Would you is it possible to bring it earlier if the demand momentum continues like this, especially with the new product launch? Yes. Very good question, Kapil. So that's what I was saying that we did start thinking about this as a potential requirement, which is also what played a role in how we sized up our fundraise. So the overall INR 2,500 crores in our mind also gives us the watches to fast track Auric Phase II without necessarily waiting for more proof of Phase I. So we'll see in the coming couple of quarters if this trajectory holds up, I would not rule out a Phase II fast tracking, quite a material fast tracking.

29:04 We take the next question from the line of Gunjan from Bank of America. Yes. Hi, thanks for taking my question. Just continuing on similar lines, zooming in a little bit more on the capacity and the commodity bit. On the capacity, Daron, you mentioned 30 goes to 35 immediately. You've debottlenecked or ramped it up. By Q1, that gets to roughly 72. Is that what 40 plus the 35, 75, is that the way to think about it? By Q1, we'll be 75 of next year. By Q1 twenty eight, you mean? Yes. Very high likelihood, yes.

29:49 Okay. And then you mentioned that there is a 60 ks per month that you're allocating to EL. How do I read these two together? I mean, is it the fungible lines? Is there something else that I need to understand here? So ORIC has been completely dedicated towards towards EL. What we've also done in Hosur is, yes, Hosur does have some amount of longevity, but more importantly, Hosur does have additional capacity. So we can either give EL the full 18 ks out of Hosur or we can take it down because we are already we already have the capacity to do 35 ks of Rista and four fifty. So we can play between these two. We can't add them up. So we can't do 35 plus 18 because that much line capacity we don't have. But with a little bit of heads up, we can choose that allocation.

30:44 So EL with Phase one of ORIC, EL can have a net total capacity of 42 plus eighteen sixty Okay. Okay. Got it. Okay, that's clear. And on the acceleration of Phase II, is there a time line that you can put that how soon can it be done if you had to do it, ORIC? I think difficult to say this quarter, Gunjan. Maybe by next quarter, I'll be a little bit more wise about it. The upsides are that the land was secured together, incentives were negotiated in one go. Some of the infra will also be common between both Phase one and Phase two. So Phase two should certainly take lesser time than it took Phase one. Lot of approvals already in place also.

31:31 The downside is or downside or rather let me call out the watch out right now is we don't want to start Phase II today or start giving a guidance or time line today because it just feels like we should be a little bit more cautious, just see Phase I, at least go live in the next few months and then get going with Phase two. So right now, we are in the planning stage for Phase two. If all looks well, maybe in a quarter or two max, we'll have more formal time lines and guidance to share. Got it. And on the commodity increase, sorry, a little bit more discussion is happening on this. Just trying to get my head around, you will have a 7.5% sort of commodity hit in Q1 and Q2 put together. Can you just give us some thought process on how much price hike has been taken?

32:18 How would we look to sort of cover some of it through combination of price hike? Secondly, structural benefits that we have already accrued and we may potentially see from EL platform, any ballpark math around it. And of course, we'll hope that commodities pull off. But in absence of, let's say, commodities plateau out here, how do we look at the sort of covering up this 7%, 7.5% sort of RM headwind? Yes. So in Q1, we started increasing our ASPs. The bulk of this ASP increase has come on the back of price increases, which are 100% margin accretive. I would say maybe about onethree was improved SKU management, which is not fully margin, it's maybe over 25% of that flows back into gross margins.

33:10 So we took a pricing up to so we were 100 and INR 1.5 lakh per vehicle in Q4. We went up to INR 153 ks in April, INR 153 ks in May and INR 161 ks in June. So that's where for the quarter, we may have averaged out probably closer to 155 or so. But the reality is, since June, our pricing is already or our ASP is already around 1.61 lakhs. So that benefit would be seen on a full quarter basis in Q2 and which is where I'm reasonably confident that further hits from commodity at this point may be largely mitigated by the price hikes that we've already done, which will reflect in our financials in Q2. So yes, so this 5.6% could only be partly absorbed, but any further increase can be more or less managed.

34:03 There's only one downside to ASP, by the way, as EL launches later this month and as it scales up in production, it will likely depress our ASPs a little bit. But on a whole, overall, margins will likely look quite fine. So at a margin level, think we've already made a move. And in Q2, we should not see a material degradation from RM any further. This point onwards, probably for the first time, I would say, gross hits from commodities are probably now like there is a line of sight of where they are headed. I don't think they will continue getting worse with no end in sight. There's probably another 100 to 100 which we can probably manage with our already announced price hikes. Got it. No, that's super clear. And last question, Arun, is going back to the opening comments that you made that we're seeing a pretty big change in the policy push for EVs, and you highlighted Delhi, and you did mention a few more.

35:03 Is is... I mean, is there something that you're seeing, you know, with the sort of adoption we are seeing? Is is anything else coming from other states? Because the reason I ask is Delhi faced a lot of skepticism. Right? I mean, small state, neighboring states, we can see registration. You know, you sort you sort of heard skepticism on whether it will be successful or not. Are you sort of hearing the similar sort of narrative from other states or at a central level as well that there could be a more stringent policy push towards EVs now? I think all signs that we have seen are remarkably consistent from a policy perspective around the need to support electric vehicles, which is also why there's been an increased reach out to, for example, new age EV players in order to take their inputs as to what role brands like us can play.

35:58 There's been conversation around if PME drive can be extended. Building EV policy is obviously the strongest move yet. I think it will get a lot of debate in the coming quarters. But I feel now with some conviction that this policy is going to land. Yes, there will be some parts which will probably get negotiated for a while or might get pushed out for a while. In some categories, there's not enough proof of success with electric vehicles yet. So there will be rightfully some pushback temporarily on it. But overall, like something like in scooters, I think it will be difficult to stop the tsunami of support. See, because, Bundit, I think for the first time and let me zoom out a little bit. Many years ago, Delhi tried the odd even policy.

36:43 But I think there was a lot of pushback on it despite being probably a good one from a pollution perspective because consumer support for the policy was not strong enough probably. But I think what we are noticing with Delhi EV policy this time is that the consumers' confidence and comfort, yes, we have to move to electric, this has to be done, is very high. And I think that's playing a big role in giving the confidence to authorities to then not back off and continue driving this. We're also seeing other states like Haryana now following a similar trajectory or at least showing more support. And finally, irrespective of when these policies exactly play out, it's a sentiment that has changed really, which is why my first point really was like the Prime Minister saying that electrify cooking and electrify transport.

37:35 It's a very powerful thing because for a lot of people that really sets the tone that then this is time for mainstream. This is the right thing. This is a nationalist thing to do. So I think that is not playing a small role. That's playing a pretty powerful role. We take the next question from the line of Mukesh Sarath from Vendes Park. Please go ahead. Yes, good evening and thank you for the opportunity. My first question is regarding the ORIC Phase one. How do you see the ramp up of production happen? While the plant starts in November, how do you see the ramp up there? The reason I'm asking is that we're already about 15 ks short of production.

38:26 And then we have the EL launching as well. So just trying to understand how the scale up can happen there. Yes. Thanks. So ORIC will equipment installation is ending in the next couple of months and we'll start trial productions from the fiscal year. Expect daily output reliable daily output all throughout Q4, starting from first gen itself. It's difficult for me to exactly pin down whether it's end of Q4 or into Q1 that the ramp up to 42,000 units a month will finish, but it will finish sometime in that zip code. So I would say the overall ramp up from zero to 42,000 a month is somewhere in the vicinity So of four to five that's how I'd rate it.

39:17 Obviously, I recognize there's a large gap for us to fill. But the good news is this is a big step up that we are going to be experiencing. Don't have the upside of seeing linear increases every other month. But the big step up will hopefully hold us steady for at least a few quarters before, if required, we need to ramp up to Phase II. Right. And in continuation, this INR 18,000 a month that you'll start off with at Huzoor, in all probability, that will be coming off the Rizda and you'll maintain the production of the 450X? Or that's not how I should look at it? Sorry, Mugesh, I missed your starting of the question. Can you repeat? This INR 18,000 a month that you're planning to first begin at Husser, within the 25 within 35,000 that's available right now, we should assume that the Zizta production will come off while ATL goes up and $4.50 is kind of you'll look to maintain the production?

40:19 Correct. So that's the flexibility that we will create for ourselves. While EL will have uninterrupted availability for the 42,000 units a month from Auric Phase It will also have the option to grow into another 18,000 in Hosur. But but should the the demand continue to hold up meaningfully, we can allocate that supply to RISTA instead and let ORIC grow more organically only out of ORIC. Let EL grow more organically only out of ORIC. So we'll decide this in a more fluid, in a more dynamic manner as we see early demand trajectory through. But yes, directionally, it's Rista that will likely see more cannibalization from EL rather than four fifty. Four fifty is likely unlikely to be impacted by EL's launch.

41:13 Got it. Got it. And just lastly, any updated targets you have on the dealer addition given we are slightly short of capacities now and how the ramp up there is going to be? So dealer addition, any updated targets? Yes. No. So, Mukeshi, we've gone slow with the new store opening in Q1 because exactly the point that you said, it is not prudent for us to ship out more inventory to build out new stores while existing stores are only meeting 50%, 60% of demand. So we're waiting out a couple of quarters. But with EL going live and particularly ORIC go live happening by the state, you will start seeing a surge in new store openings from our end once again, which is when we'll also bring the metric up and start giving more color on that.

42:05 It. Got it. All right. Thank you. I'll get back in the queue. Thank you. We take the next question from the line of Yash Agarwal from Nirmal Bank Institutional Equities. Please go ahead. Hi, sir. Thank you for the opportunity and great set of results. So just wanted to know that non vehicle revenue has increased to 14% of operating revenue. So what are our long term targets? And what are the typical margin profile for software, charging, S series and other non vehicle revenue? So non vehicle revenue for us is the largest piece today for us is the ATHERSAK Pro, the software pack in our offering, which has done incredibly well for us, even better than we anticipated.

42:52 The potential for growth, however, comes from two other parts, which are service revenues and accessory sales. Accessory sales actually have been quietly compounding. We haven't given color publicly this quarter, but maybe in a few quarters, we will bring it up and give a little bit more color. But accessory business has been building out really well. But the biggest compounder of all would likely be the service revenues because that's a function of fleet size. For established sorry, for established tubular businesses, service revenues can be as high as 10% to 12% of their overall revenues. For us, that's more in the vicinity of a couple of percentage points, two, three percentage points. So there is a tremendous amount of growth possible here over the next decade.

43:43 So we do expect this will continue increasing. In the short term, it has seen some support because of the price increases on ATHERTAC Pro. In the medium term, accessories will also play a material role. But in the long term, this is going to compound on the back of service revenues service and space. Okay, sir. And the second question is like several OEMs are preparing to launch their electric motorcycle in the next twelve to eighteen months. So how do you see this segment evolving and that if they intend to participate meaningfully before like in next one or two years? Or the generic platform will take more than that to come up with this first product? You know, sir, at this point, we are laser focused on the Yale platform and getting at least the first maybe two products maybe another product out on it in the next year.

44:36 Motorcycles are starting to look interesting. That's true. But ATHER may not be the pioneer at this time. We may watch the market. We want to see how consumers respond, which segments show a willingness and an interest towards the segment before we make our maiden launch here. So this is, I would say, more than a year away for sure, probably two years plus. Okay, sir. And one last question on the experience center addition. So how has the productivity of the centrally added stores evolved versus mature stores? And can you share any trend in average retail throughput per outlet? Yes. I'm not able to share retail throughput per outlet, but even before the demand surge that we've seen in the last four, five months, our new store so we look at stores on a quarterly cohort basis. So stores that open in Q3 are tracked together.

45:36 So every cohort was showing operational profitability in less than six months, five to six months on an average. So while some stores might take seven, eight months, but the average was really, really rapid. In fact, it was much faster than we had guided to our own retail partners. So in light of what's happening right now, honestly, we ramp up more and more supplies, I would not be surprised if stores start becoming operationally profitable in as early as two months. So that's also possible. But we've had a good good track record on this at least throughout FY 2026. Okay, sir. And just one last question on like what has been the breakup between Tier one, Tier two and Tier three cities in terms of retail sales in the last one or two quarters?

46:32 Sorry, I'm going be going by memory here because we don't have it on our fingertips. But I do remember that Tier two or Tier three stores were becoming our biggest volume drivers because obviously that they're also we're also adding a lot more cities and stores there. So at least a year ago, I think one years point ago, I think we had equal sales coming out of top 10 cities and then the next 20, 30 cities and then the next few 100 cities. Sorry, top sorry, my bad, top 20 cities and then the next 100 cities and then the long tail of all cities after that. But I think it's becoming more Tier three heavy in terms of just absolute throughput in the recent few quarters.

47:19 Also, the EV penetration is highest in Tier two and Tier three for a while now. So it kind of stands to reason that we will see stronger traffic out there. Okay. That's it from my side. Sure. Thank you. We take the next question from the line of Nikol Kale from Invesco. Please go ahead. Yes. Hi. Thanks. Thanks for taking the question. So Tarun, just a couple of questions. One on the EL launch. So how are you thinking about the launch in terms of would it be fair to assume that the launch will be more catered towards, say, Middle India or the Northern part of the country initially? Very likely, Nikhil. There's been a lot of pull and customer interest for more favorably priced ratings in particularly the northern markets. So expect us to have a slightly higher bent towards that. Particularly, there will be a heavy bias towards that in the early few months before we open up sales across the country.

48:23 We followed a focused geo strategy even during the Rista's launch, starting from targeted markets in Middle India and then rest of India and then South India. The order might be a little different this time, more rest of India, then Middle India and then South India. It also follows a larger sorry, please go on. No. So I mean assuming that this will probably be at a slightly lower ASP, like you mentioned that ASPs will trend down. So I mean the expectation for what's the expectation for, say, ATHER, Stack Pro attach rates, will they kind of trend down for this product generally given that it will be slightly on the lowest price point? I would like to guide so. However, having seen the track record over the last one years point or so, maybe I'll be a bit more optimistic.

49:14 I wouldn't guide very low. I would cautiously guide at least 75% attach rates with EL also, but I would hope for even higher. Understood. And just lastly, you spoke about the fungibility at Hosul plant, but just theoretically, if the rest are kind of holds up the volume and if I mean, I hope it happens that this demand kind of surprises on the upside, then how do you kind of cater to that? Because is are you capable of also doing this time? I think initially, we had also spoken about moving RESTNAND to the EL platform. So what are the plans for that? I think if that happens, the latter is a more likely outcome because Auric is built for the platform, EL. Sure, it can handle more products, but as a platform, ORIG is best suitable for the EL platform.

50:06 So if genuinely the demand surprises us on the upside, expect us to find ways to build it on the EL platform in the more mid to long term. But in the short term, we are anyways well capitalized on capacity for the Arista product and the platform as a whole out of Hosul because wholesale can do 35,000 a month and we are also trying to push that up a little bit more. Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Murali Seshidharan for his closing comments. Thank you, everyone.

50:53 We sincerely appreciate all of you joining us today and for your continued engagement and support. We look forward to updating you on our development in the coming quarters. So wishing you all a great week ahead. Thank you. Thank you, sir. On behalf of ATHERENERG Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.