New Delhi: Ather Energy Ltd reported record revenue in the December quarter and inched closer to profitability even as electric two-wheeler penetration fell in the festive quarter after tax cuts on fossil fuel-powered vehicles.

The maker of Rizta electric scooter saw its losses more than halve to ₹85 crore from a year earlier as its earnings before interest, tax, depreciation and amortization (Ebitda) or operating margin improved by 16 percentage points from -19% to -3% in the third quarter of financial year 2026. Total revenue surged 53% year-on-year ₹996 crore, driven by a 50% jump in e-scooter sales to 68,000 units during the quarter.

"This is certainly a fairly strong performance by our partners across the country. Distribution has continued to expand pretty much in line with what we had guided," Tarun Mehta, co-founder and chief executive at Ather, told analysts and investors during the post-earnings call on Monday.

"We closed Q3 with 600 stores open pan India, and we are very much in line for opening 700 stores by the end of this fiscal," he said, attributing increasing distribution as a growth driver.

Ather's sales and revenue surged even as the September cuts in goods and services tax brought down prices of internal combustion engine (ICE) vehicles, bringing down the share of EVs in the October-December period. According to Federation of Automobile Dealerships Associations (Fada) data, EV penetration fell from 8% in September to 4.6% in November, before recovering to 7.4% in December.

GST on most ICE two-wheelers was reduced from 28% to 18% in September, while EVs remained at a concessional rate of 5%, narrowing the price gap between them.

Ather is the first pure electric vehicle company to release its quarterly results, with its larger rivals Bajaj Auto Ltd and TVS Motor Co. reporting results last week.

The sharp improvement in Ather's profitability margins came in a quarter when Bajaj Auto's battery-powered two-wheeler business broke even operationally. Erstwhile market leader Ola Electric had achieved Ebitda (earnings before interest, taxes, depreciation, and amortization) breakeven for its EV two-wheeler business in the July-September quarter.

Ather said its margins improved on the back of achieving scale in sales and better cost management. But the market will face headwinds ahead as input costs are rising, and the government's subsidy for electric two-wheelers under the PM E Drive scheme will end by March.

Ather Energy sold 21,924 scooters in January, nearly three times the 7,512 units recorded by Ola, according to data from the government Vahan portal. Ola's sales in January were the lowest since it went public in August 2024.

Ather's Mehta said the electric two-wheeler industry is continuing to grow despite the GST cuts, suggesting that industry observers need to view sub- ₹1 lakh and over- ₹1 lakh scooters separately.

"The real growth in the EV two-wheeler industry is being masked because a lot of vehicles below the ₹1 lakh price points have shrunk in the past one year. Products priced above ₹1 lakh have grown at a beautiful growth rate over the last 18 months," Mehta said during the earnings call.

"When you put the entire industry together, you see a very humble growth...A lot of fluff in the sub- ₹1 lakh has disappeared. There are buyers in the segment and a lot of good products are there now, so the growth should come back," Mehta said, adding that with signs already visible of recovery.

Ather's shares fell by 2.5% on Monday against a 2.1% rise in Nifty Auto. But investors have shown faith in the stock, which has doubled in the past eight months since the company listed.