A Hero-group automotive-technology company opens its Rs 1,000 crore mainboard issue on September 16
Hero Motors Ltd is an India-based automotive-technology company that designs, develops, manufactures and supplies highly engineered powertrain solutions for global automotive OEMs across the US, Europe, India and ASEAN — a play on the global shift to e-mobility and premium two-wheelers.
It operates two segments: Powertrain Solutions (Gears & Transmission, and Bike Powertrain) and Alloys & Metallics (A&M). Hero Motors is a recognised leader in continuously variable transmissions (CVT), EV transmissions, electric motors, integrated drive units and gear sets — and, crucially, is among the first movers in the global e-bike powertrain opportunity, with a first-mover advantage in global e-bike CVT hubs.
It focuses on providing complete systems and powertrain solutions for the e-mobility segment. The clientele is genuinely marquee and global. Hero Motors counts BMW, Ducati, enviolo, Formula Motorsport, Hummingbird EV and HWA AG among its customers, alongside group ties to Hero MotoCorp and Hero Cycles.
Its manufacturing and technology footprint spans India, the UK and Thailand, supported by a joint venture (HYM) for two-wheeler motors and the design expertise of its UK-based Hewland business.
Its strategy centres on complete e-mobility powertrain systems, expanding into new segments and geographies, leveraging Hewland for design-to-cost solutions, strengthening global technology partnerships, and pursuing inorganic growth.
Strengths include a leading position among India’s solution providers to the global e-mobility industry, a diversified product/service mix, a growing presence in e-bikes and premium two-wheelers, longstanding OEM relationships with proven delivery, geographically diverse operations (India, UK, Thailand), and strong R&D and long-term technology partnerships. The promoter is Pankaj M. Munjal (Hero group).
Issue Details
| Particulars | Details |
|---|---|
| Issue Opens | September 16, 2026 |
| Issue Closes | September 18, 2026 |
| Listing | BSE, NSE (Mainboard) |
| Listing Date | September 23, 2026 |
| Price Band | Rs 79 – Rs 84 per share |
| Face Value | Rs 10 |
| Issue Size | Rs 1,000 crore (~11,90,47,618 shares) |
| Fresh Issue | Rs 600 crore |
| Offer for Sale | Rs 400 crore |
| Lot Size | 178 shares |
| Min. Retail Investment | Rs 14,952 |
| Market Cap (Pre-IPO) | Rs 3,815.41 crore |
| Lead Managers | ICICI Securities, DAM Capital Advisors, JM Financial |
| Registrar | KFin Technologies Ltd. |
The issue is majority fresh (Rs 600 crore) with a Rs 400 crore OFS. From the fresh proceeds, Hero Motors will utilise funds for repayment or prepayment of outstanding borrowings (~Rs 190 crore), capital expenditure for capacity expansion (~Rs 200 crore, at Gautam Buddha Nagar), and funding acquisitions, strategic initiatives and general corporate purposes.
The debt-reduction and capex components are positives, though the Rs 400 crore OFS does not come to the company, and no specific acquisition target has been identified.
Price Band
At the upper band of Rs 84, the valuation is demanding. On a pre-IPO basis the P/E is around 77.78x; reviewers cite a post-issue P/E in the ~69–74x range (some data providers put it as high as ~92x on diluted EPS), with a P/BV of ~6.60 and RoNW of 8.53%. Against a peer average P/E of about 50.2x, Hero Motors is priced at a premium — leaving, as Swastika notes, limited upside cushion.
GMP
the Hero Motors IPO GMP ranged from ₹8 to ₹24, and stood at around ₹17–24 in the days around opening — implying a listing gain of roughly 20–28% over the Rs 84 upper band (an indicative listing near ₹101–108).
Financial Performance
| Particulars (Rs cr) | FY24 | FY25 | FY26 |
|---|---|---|---|
| Revenue from Operations | 1,064.39 | 1,089.59 | 1,188.35 |
| EBITDA Margin (%) | 6.32 | 8.48 | 10.21 |
| Net Profit | 13.42 | 25.20 | 43.57 |
| Net Worth | 385.84 | 425.09 | 474.66 |
The financials show steady revenue with sharply improving profitability. Revenue from operations grew modestly from Rs 1,064.39 crore in FY24 to Rs 1,188.35 crore in FY26 (single-digit growth), but the profit trajectory is much stronger — net profit more than tripled from Rs 13.42 crore to Rs 43.57 crore over two years, driven by margin expansion. EBITDA margin improved steadily from 6.32% to 10.21%, and RoNW improved to 8.53%.
According to a note by Swastika Investmart Ltd, which assigns a Neutral rating: Hero Motors is a “leading powertrain provider with first-mover advantage in global e-bike CVT hubs,” but trades at a “P/E of ~69–74x vs peer average of 50.2x, leaving limited upside cushion.” It notes “RoNW improved to 8.53% and EBITDA margin to ~10.2%, but remains below key peers,” and “top 10 customers contribute ~73–78% of revenue, creating concentration risk.” Its view: “Neutral, given the strong business and EV growth potential, but high valuation limits the upside cushion.”
Peer Comparison
| Company | EPS (Rs) | P/E | Revenue (Rs cr) | RoNW (%) |
|---|---|---|---|---|
| Hero Motors | 1.15 | 77.78 | 1,188.35 | 8.53 |
| Cie Automotive India | 21.69 | — | 9,406.47 | 13.18 |
| Endurance Technologies | 67.66 | — | 14,595.88 | 15.29 |
| Sona BLW Precision Forgings | 10.30 | — | 4,449.46 | 10.77 |
| Uno Minda | 20.78 | — | 19,657.59 | 19.59 |
| Varroc Engineering | 14.73 | 40.84 | 8,890.49 | 18.70 |
Against the listed auto-component peer set — averaging around 50.2x P/E — Hero Motors’ ~69–78x is at a clear premium, while its 8.53% RoNW sits at the lower end of the group. This combination of a higher multiple and lower returns is precisely what caps the upside cushion.
Risks to Consider
Valuation is the headline risk. At a P/E of ~69–78x (post-issue) versus a peer average of ~50.2x, and with RoNW below key peers, the pricing embeds substantial growth expectations and leaves limited room for disappointment.
Customer concentration is significant. The top 10 customers contributed 72.9%–78.0% of revenue over FY24–26, so the loss of, or reduced orders from, a major OEM could disproportionately hit revenue.
Geographic/export concentration and geopolitical risk. High revenue from outside India — particularly Europe (~29–34% of revenue over FY24–26) — exposes the business to regional economic and geopolitical shocks, and to currency risk.
Industry cyclicality. The business depends on the two-wheeler and e-bike industries’ cyclicality in India and overseas, so a downturn in those end-markets could affect demand.
Supplier dependence. Reliance on a limited set of suppliers for critical raw materials, without definitive long-term supply agreements, is a supply-chain risk.
Growth-execution and OFS considerations. There is a risk the company may not successfully implement its stated growth strategies (including unidentified acquisitions), and the Rs 400 crore OFS portion goes to selling shareholders rather than the business.
