HERO MOTORS LIMITED

Sector: Automotive Components & Mobility Technology
Industry: Powertrain Solutions, EV Components, Gears & Transmissions
Status: Unlisted / IPO Open
CIN: U29299PB1998PLC039602
ISIN: INE012G01022
Face Value: ₹10 per share
Incorporated: 30 April 1998
Registered Office: Hero Nagar, G.T. Road, Ludhiana, Punjab
IPO Price Band: ₹79–₹84 per share
IPO Size: ₹1,000 Cr
IPO Opening: 16 September 2026
IPO Closing: 18 September 2026
Proposed Listing: NSE & BSE
Lot Size: 178 shares
Maximum IPO Price: ₹84

1. Executive Summary

Hero Motors Limited is an automotive technology and components company belonging to the HMC Group and led by the Munjal family.

The company develops and manufactures powertrain systems, gears, transmissions, electric motors, integrated electric drive units, CVT systems, alloy components and metallic assemblies for both electric and conventional vehicles.

Its business is broader than a conventional auto-component manufacturer. Hero Motors supplies products across:

• Two-wheelers
• E-bikes
• Electric vehicles
• Hybrid vehicles
• Performance automobiles
• Commercial vehicles
• Off-road vehicles
• Motorsport
• Specialty mobility
• eVTOL applications

The company operates across India, the UK and Thailand, with six manufacturing facilities and two technology centres. International customers contributed approximately 41.36% of FY26 revenue, while EV-related revenue increased to 23% of FY26 revenue from 12.03% in FY24.

Hero Motors has now moved from the unlisted market into the IPO stage.

The company is raising ₹1,000 Cr, consisting of:

₹600 Cr fresh issue + ₹400 Cr offer for sale.

The fresh issue proceeds are primarily intended for debt repayment, capacity expansion and strategic/inorganic growth.

2. Current IPO Status

The most important update is that Hero Motors’ IPO is currently open.

IPO structure

Particular	Details
IPO Size	₹1,000 Cr
Fresh Issue	₹600 Cr
Offer for Sale	₹400 Cr
Price Band	₹79–₹84
Face Value	₹10
Lot Size	178 shares
Minimum Investment	₹14,952 at ₹84
Opening Date	16 Sep 2026
Closing Date	18 Sep 2026
Proposed Listing	23 Sep 2026
Exchanges	NSE & BSE
Registrar	KFin Technologies

The company’s official IPO page contains the DRHP, RHP and related offer documents.

Hero Motors Official IPO / Offer Documents

As of September 16, the issue was reported as fully subscribed on its first day of bidding. This is a subscription-status observation, not an assessment of investment quality.

3. Company Overview

Hero Motors was incorporated in 1998 and has evolved into an integrated automotive technology company.

Its core proposition is not simply manufacturing individual components; the company provides integrated solutions covering:

Design → Engineering → Prototyping → Validation → Manufacturing

This allows it to participate earlier in the product-development cycle with global OEM customers.

The company operates through three broad business areas:

1. Gears & Transmissions

Products include:

• Transmission systems
• Gears
• CVT systems
• Transmission components
• High-performance gear systems
• EV transmission solutions

2. Bike Powertrain

Focused entirely on electric mobility.

Products include:

• Electric motors
• Electric drive units
• CVT systems
• Integrated electric powertrain systems

3. Alloys & Metallics

Products include:

• Sheet-metal components
• Tubular components
• Machined components
• Alloy components
• Welded assemblies
• Painted components

The company’s FY25 annual report describes these businesses and its global manufacturing footprint.

4. Business Segmentation – FY26

FY26 revenue mix was approximately:

Business	FY26 Revenue	Share
Gears & Transmissions	₹488.7 Cr	~41.1%
Bike Powertrain	₹148.9 Cr	~12.5%
Alloys & Metallics	₹550.6 Cr	~46.3%
Total	₹1,188.4 Cr	100%

The Powertrain Solutions business therefore contributed slightly more than half of consolidated revenue when Gears & Transmissions and Bike Powertrain are combined.

5. Powertrain Solutions

Powertrain Solutions is strategically important because it moves Hero Motors towards higher-value engineered products.

The company supplies transmission and powertrain solutions for:

• Motorcycles
• E-bikes
• Passenger vehicles
• Commercial vehicles
• Off-road vehicles
• Performance vehicles
• EVs
• Hybrid vehicles

The company also has capabilities in high-performance and motorsport applications through its UK operations.

This provides exposure to both traditional internal-combustion vehicles and emerging electric mobility.

6. Electric Mobility

One of the strongest structural changes in Hero Motors’ business has been the growth of EV-related revenue.

EV-related revenue

Fiscal Year	EV Revenue Share
FY24	12.03%
FY25	16.12%
FY26	23.00%

This means the proportion of revenue associated with global e-mobility has nearly doubled in two years.

However, Hero Motors should not be viewed as a pure EV company.

Approximately 77% of FY26 revenue was still derived from non-EV applications.

That diversification allows the company to participate in both existing ICE/hybrid markets and the emerging EV market.

7. E-Bike Opportunity

The company has developed a specialised position in electric-bike powertrain technology.

Hero Motors manufactures and exports CVT hubs for global e-bike OEMs and has developed integrated electric powertrain products.

Its e-bike business includes technology partnerships and products supplied to global mobility companies.

The company reports that its CVT systems powered more than 0.40 million e-bikes globally during FY24–FY26.

The e-bike opportunity is significant because Hero Motors can potentially participate in:

Motor + transmission + integrated drive unit

rather than supplying only a single mechanical component.

8. Global Customers

Hero Motors has established relationships with global automotive and mobility companies.

Customers/programmes include names such as:

• BMW
• Ducati
• Enviolo
• Hero MotoCorp
• River
• Other global e-bike and mobility manufacturers

The company has developed long-term relationships with several customers, but customer concentration remains a major issue.

9. Customer Concentration

This is one of the most important risks disclosed in the IPO documents.

FY26 customer concentration

Customer Group	Revenue Contribution
Largest customer	35.57%
Top 5 customers	61.42%
Top 10 customers	72.89%

The largest customer contributed approximately ₹422.74 Cr of FY26 revenue.

The concentration has improved:

Top 10 customers

FY24: 76.96%
FY25: 78.03%
FY26: 72.89%

So diversification is moving in the right direction, but the company remains significantly dependent on a relatively small number of customers.

This is particularly important for an automotive supplier because the loss or reduction of a major vehicle programme can materially affect capacity utilisation and revenue.

10. International Business

Hero Motors has developed a significant international revenue base.

FY26 international revenue

Approximately:

₹491.53 Cr

or:

41.36% of revenue from operations

The company supplied customers across approximately 23 countries during FY26.

Geographic revenue mix

Geography	Approx. FY26 Share
India	58.64%
Europe	33.59%
United States	3.86%
Other markets	3.91%

This gives the company geographical diversification but also creates:

• Currency risk
• European automotive-cycle exposure
• Global demand risk
• Export logistics risk
• Regulatory exposure

11. Manufacturing Footprint

Hero Motors currently operates six manufacturing facilities across:

India + UK + Thailand

It also has two technology centres:

• Gautam Buddha Nagar, India
• Southam, UK

The company is also developing additional facilities in:

• Ludhiana
• Bengaluru

Its current manufacturing footprint allows it to serve both Indian and international OEM customers.

12. Technology & R&D

Engineering capability is an important part of Hero Motors’ business model.

FY26 R&D expenditure was approximately:

₹89.59 Cr

equivalent to around:

7.54% of revenue

This is significant for an auto-component company because new product development, validation and customer-specific engineering are important for securing future vehicle programmes.

The company therefore competes not only on manufacturing cost but also on:

• Engineering
• Product development
• Design
• Validation
• Intellectual property
• Manufacturing quality
• Customer integration

13. Acquisition Strategy

Hero Motors has used acquisitions and strategic partnerships to expand its technology capabilities.

Hewland Engineering

Hero Motors acquired a majority stake in UK-based Hewland Engineering, a company associated with high-performance transmission technology.

Hewland provides exposure to:

• Motorsport
• High-performance vehicles
• Advanced transmission systems
• Engineering technology

Spur Technologies

The company acquired Spur Technologies during FY24.

Spur is involved in components for premium motorcycles and electric bikes.

The company has indicated that it is also exploring further technology acquisitions and strategic alliances, particularly in North America and Europe.

14. FY26 Financial Performance

Consolidated financials

Particulars	FY24	FY25	FY26
Revenue from Operations	₹1,064.39 Cr	₹1,089.59 Cr	₹1,188.35 Cr
EBITDA	₹86.28 Cr	₹114.00 Cr	₹147.78 Cr
EBITDA Margin	8.11%	10.46%	12.44%
PAT	₹17.04 Cr	₹32.80 Cr	₹41.17 Cr
PAT Margin	1.60%	3.01%	3.46%
Net Worth	₹374.82 Cr	₹426.01 Cr	₹481.01 Cr
Borrowings	₹303.998 Cr	₹407.62 Cr	₹400.79 Cr

The FY24–FY26 figures are based on the restated financial information presented in IPO-related research based on the offer documents.

15. Revenue Growth

FY26 revenue grew approximately:

9.06% YoY

from ₹1,089.59 Cr to ₹1,188.35 Cr.

The more notable development was profitability.

EBITDA

FY24: ₹86.28 Cr
FY25: ₹114.00 Cr
FY26: ₹147.78 Cr

FY26 EBITDA growth was approximately:

29.6%

versus revenue growth of approximately 9.1%.

This resulted in EBITDA margin increasing from:

8.11% → 10.46% → 12.44%

over FY24–FY26.

16. Adjusted EBITDA

The company also reports adjusted EBITDA after certain adjustments.

Fiscal	Adjusted EBITDA	Margin
FY24	₹125.74 Cr	11.81%
FY25	₹128.82 Cr	11.82%
FY26	₹160.24 Cr	13.48%

The improvement in adjusted EBITDA margin suggests that the FY26 margin expansion was not solely due to accounting adjustments.

However, investors should still examine the reconciliation between reported and adjusted EBITDA in the RHP.

17. Profitability

PAT increased from:

₹17.04 Cr in FY24

to:

₹32.80 Cr in FY25

and:

₹41.17 Cr in FY26

FY26 PAT growth was approximately:

25.5%

while PAT margin increased to approximately:

3.46%.

Despite the improvement, the net margin remains relatively thin compared with several established listed auto-component companies.

18. Cash Flow

FY26 operating cash flow was approximately:

₹144.04 Cr

versus:

₹48.34 Cr in FY25

and:

₹131.97 Cr in FY24.

The recovery in FY26 operating cash flow is positive from a cash-generation perspective.

However, working capital needs monitoring.

Receivable days

FY24: 67 days
FY25: 68 days
FY26: 78 days

The increase in receivable days indicates that cash conversion from customers became slower during FY26.

Inventory days remained around:

64 days

while payable days declined from 46 to 43 days.

19. Capital Expenditure

Hero Motors has historically invested heavily in manufacturing capacity and technology.

FY26 capital expenditure was approximately:

₹92.25 Cr

compared with approximately ₹152.40 Cr in FY25.

The IPO now provides another significant source of growth capital.

20. IPO Objects – ₹600 Cr Fresh Issue

The company will receive proceeds only from the ₹600 Cr fresh issue.

The ₹400 Cr OFS proceeds will go to the selling shareholders.

Fresh issue utilisation

Purpose	Amount
Debt repayment/prepayment	₹190 Cr
Capacity expansion / equipment	₹200 Cr
Inorganic growth & strategic initiatives	Balance
General corporate purposes	Balance

The ₹200 Cr capex is primarily intended for capacity expansion at the Gautam Buddha Nagar, Uttar Pradesh facility.

21. Why Gautam Buddha Nagar Expansion Matters

The company’s Gautam Buddha Nagar powertrain facility was operating at relatively high utilisation.

Reported FY26 capacity utilisation included approximately:

88.25% for Powertrain

and around:

78.53% overall

This provides a clear operational reason for additional capacity.

At the same time, some newer international facilities have lower utilisation, meaning future returns will depend on the ramp-up of these investments.

22. Debt Position

FY26 borrowings were approximately:

₹400.79 Cr

Debt/equity:

~0.83×

Net debt/adjusted EBITDA:

~2.24×

This represents an improvement from approximately 2.79× in FY25 but remains higher than FY24’s 1.72×.

IPO impact

The proposed ₹190 Cr debt repayment should reduce leverage after the IPO.

The exact post-IPO debt position will depend on the company’s debt movements between March 2026 and the completion of the issue.

23. IPO Valuation

The IPO price band is:

₹79–₹84

At the upper band, the company is expected to have a market capitalisation of approximately:

₹3,815 Cr

before considering the post-issue capital structure and listing-market movements.

FY26 EPS

The restated FY26 diluted EPS is approximately:

₹1.14

before considering the full dilution impact of the fresh issue.

Using ₹84:

₹84 ÷ ₹1.14 ≈ 73.7×

This is the commonly cited pre-issue FY26 P/E calculation.

However, after the fresh issue, the share count increases, so post-issue EPS is lower.

IPO research sources estimate post-issue FY26 EPS around ₹0.96, implying a post-issue P/E of roughly:

82–88×

at the ₹79–₹84 price band.

24. Valuation Sensitivity

Using post-issue illustrative EPS of approximately ₹0.96:

P/E	Implied Value
40×	₹38
50×	₹48
60×	₹58
70×	₹67
80×	₹77
85×	₹82
90×	₹86
100×	₹96

This shows that the IPO valuation is heavily dependent on expectations of future earnings growth, rather than current earnings alone.

The company would need continued growth in:

• Powertrain revenue
• EV revenue
• EBITDA margin
• Capacity utilisation
• Global customer programmes
• New product wins

to support a substantially higher earnings base over time.

25. Peer Comparison

Based on FY26 figures:

Company	Revenue	EBITDA Margin	PAT Margin	P/E*
Hero Motors	₹1,188 Cr	12.44%	3.46%	~73×
CIE Automotive India	₹9,406 Cr	15.59%	8.75%	~17.7×
Endurance Technologies	₹14,596 Cr	14.17%	6.52%	~40.8×
Sona BLW	₹4,449 Cr	25.91%	14.14%	~76.5×
UNO Minda	₹19,658 Cr	12.75%	6.53%	~59.8×
Varroc Engineering	₹8,891 Cr	9.08%	2.59%	~56.2×

*Peer multiples use market prices around the period of IPO analysis; Hero Motors uses the upper IPO band.

The comparison illustrates that Hero Motors is being valued at a substantial earnings multiple despite its much smaller revenue and profit base.

26. Key Growth Drivers

1. EV penetration

EV-related revenue has increased from 12.03% to 23% of revenue in two years.

2. E-bike powertrains

Hero Motors has developed specialised capabilities in CVT hubs and integrated electric powertrains.

3. Premium two-wheelers

The company supplies components for premium motorcycle programmes, including international customers.

4. Global OEM relationships

Long-term programmes with global OEMs can provide revenue visibility once products enter serial production.

5. Powertrain mix

Powertrain Solutions is becoming a larger portion of overall revenue.

6. International expansion

More than 40% of revenue comes from international customers.

7. Technology acquisitions

Future acquisitions could expand the company’s product portfolio and geographic reach.

8. Capacity expansion

The ₹200 Cr IPO-funded Gautam Buddha Nagar expansion could support future powertrain growth.

27. Key Risks

Customer concentration

The largest customer contributed 35.57% and the top 10 contributed 72.89% of FY26 revenue.

Valuation

At the upper IPO band, the company is valued at a high multiple of current earnings.

Debt

Net debt/adjusted EBITDA was approximately 2.24× in FY26.

Loss-making subsidiaries

Six subsidiaries reported losses in FY26, including HYM Drive Systems, Hero EDU Systems, Hewland Engineering and Spur Technologies.

Capacity utilisation

Some newer facilities have relatively low utilisation, creating execution and return-on-capital risks.

Working capital

Receivable days increased to 78 days in FY26.

Automotive cyclicality

Demand is dependent on vehicle production, model launches and OEM programmes.

Acquisition risk

Further acquisitions can create integration, capital allocation and execution risks.

International exposure

Around 41% of revenue is international, creating currency and overseas-market exposure.

28. Promoter Holding

Before the IPO, promoter/promoter-group ownership was approximately 85% according to IPO-related disclosures.

After the IPO, promoter ownership is expected to decline to approximately 61%–62%, depending on the final share structure and offer calculations.

This provides a meaningful increase in public shareholding and improves the potential free-float structure after listing.

29. IPO Structure

The ₹1,000 Cr issue consists of:

Fresh Issue – ₹600 Cr

Money comes into Hero Motors.

Used for:

• Debt reduction
• Capacity expansion
• Strategic/inorganic growth

OFS – ₹400 Cr

Money goes to selling shareholders.

The OFS is primarily being undertaken by promoter entities, including O P Munjal Holdings and Hero Cycles.

Therefore, investors should distinguish between:

₹600 Cr = company receives capital

and

₹400 Cr = existing shareholders monetise part of their holding.

30. Important Distinction – Hero Motors vs Hero MotoCorp

Hero Motors should not be confused with Hero MotoCorp Limited.

Hero Motors is an automotive components and powertrain technology company.

Hero MotoCorp is a two-wheeler manufacturer.

Hero Motors supplies components/powertrain solutions to various OEMs, while Hero MotoCorp manufactures motorcycles and scooters.

This distinction is important when evaluating the company.

31. What to Monitor After Listing

For investors following Hero Motors after the IPO, the following metrics will be particularly important:

Financial

• Revenue growth
• EBITDA margin
• PAT margin
• ROCE
• ROE
• Operating cash flow

Operational

• Powertrain capacity utilisation
• E-bike volumes
• EV revenue contribution
• New customer programmes
• International revenue

Balance sheet

• Debt reduction
• Net debt/EBITDA
• Working capital
• Receivable days

Customer diversification

• Largest customer share
• Top 5 customer share
• Top 10 customer share

New investments

• Gautam Buddha Nagar expansion
• Bengaluru facility
• Ludhiana facility
• HYM capacity ramp-up
• Thailand/UK utilisation

32. Research Perspective

Hero Motors has transitioned from a traditional automotive-component business towards a more technology-oriented powertrain platform.

The most notable change is the increasing contribution of electrification.

EV-related revenue:

12.03% → 16.12% → 23.00%

from FY24 to FY26.

At the same time, the company is not dependent entirely on EV adoption. Its Gears & Transmissions and Alloys & Metallics businesses continue to serve ICE, hybrid and conventional applications.

This creates a technology-agnostic powertrain model, allowing the company to participate across multiple vehicle technologies.

The financial trend is also improving:

Revenue: ₹1,064 Cr → ₹1,090 Cr → ₹1,188 Cr

EBITDA: ₹86 Cr → ₹114 Cr → ₹148 Cr

PAT: ₹17 Cr → ₹33 Cr → ₹41 Cr

The improvement in EBITDA margin from 8.11% to 12.44% is particularly notable.

However, the valuation is the central issue.

At ₹84, the IPO implies a very high multiple of current earnings. Consequently, the investment case depends substantially on future growth in EV/powertrain revenue, customer diversification, capacity utilisation and margin expansion.

33. Overall Assessment

Hero Motors represents an interesting combination of:

Automotive engineering + global OEM relationships + EV powertrain + e-bike technology + transmission systems + international manufacturing.

The company has several identifiable growth avenues:

• EV powertrain
• E-bike systems
• Premium motorcycles
• Global OEM programmes
• High-performance transmissions
• New manufacturing capacity
• Technology acquisitions
• International expansion

Its financial performance has also improved materially, particularly at the EBITDA level.

However, investors should balance these opportunities against:

• High customer concentration
• Moderate leverage
• Loss-making subsidiaries
• Working-capital intensity
• Capacity-utilisation differences
• Automotive cyclicality
• High IPO valuation

The IPO therefore needs to be evaluated using future earnings potential rather than current EPS alone.

The IPO is currently open from 16–18 September 2026, with a price band of ₹79–₹84 and a minimum application size of 178 shares / ₹14,952 at the upper band.

The proposed listing date is 23 September 2026, subject to the applicable IPO timetable.

34. Key Numbers at a Glance

Parameter	Hero Motors
FY26 Revenue	₹1,188.35 Cr
FY26 EBITDA	₹147.78 Cr
FY26 EBITDA Margin	12.44%
FY26 PAT	₹41.17 Cr
FY26 PAT Margin	3.46%
FY26 Adjusted EBITDA	₹160.24 Cr
FY26 Adjusted EBITDA Margin	13.48%
FY26 Operating Cash Flow	₹144.04 Cr
FY26 Borrowings	₹400.79 Cr
Net Debt / Adjusted EBITDA	2.24×
EV Revenue Share	23%
International Revenue	41.36%
Top Customer Revenue	35.57%
Top 10 Customers	72.89%
IPO Size	₹1,000 Cr
Fresh Issue	₹600 Cr
OFS	₹400 Cr
IPO Band	₹79–₹84
Lot Size	178
Minimum Investment	₹14,952
Proposed Listing	NSE & BSE
Proposed Listing Date	23 Sep 2026

35. Important Links

Official Hero Motors Website:
Hero Motors Limited

Official IPO / Offer Documents:
Hero Motors IPO Documents

FY2024-25 Annual Report:
Hero Motors Annual Report FY2024-25

SEBI Filing:
SEBI – Hero Motors Public Issue Filings

Disclaimer

This report is prepared for research and informational purposes based on Hero Motors’ annual report, IPO offer documents, SEBI filings and publicly available market information.

The IPO is currently open, so the company is transitioning from the unlisted market to the listed market. IPO price-band calculations are based on the announced ₹79–₹84 range and should not be interpreted as a prediction of the eventual listing price.

Unlisted-market prices, where applicable, are indicative OTC references and are not exchange-traded prices.

Valuation scenarios and financial calculations are illustrative. Investors should read the final RHP/prospectus and risk factors carefully and independently assess the company’s financials, valuation and risk profile before making an investment decision.

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