Company Overview
Hero Motors Limited is one of India's leading automotive technology companies engaged in designing, manufacturing, and supplying highly engineered powertrain solutions catering to automotive OEMs in US, Europe, India and ASEAN regions. The company operates through two main segments: Powertrain Solutions (53.67% of FY26 revenue) and Alloys & Metallics (46.33%), with significant exposure to e-mobility accounting for 23% of FY26 revenue. The company has six manufacturing facilities across India, UK, and Thailand with technology centers in Southam, UK and Gautam Buddha Nagar, India.
Offer Details
The company has filed for an Initial Public Offering of ₹10,000 million comprising 119,047,618 equity shares at ₹84 per share. The offer includes a fresh issue of ₹6,000 million (71.4 million shares) for debt repayment, capacity expansion, and inorganic growth, and an offer for sale of ₹4,000 million (47.6 million shares) by promoters O P Munjal Holdings and Hero Cycles Limited. The price band was set at ₹79-84 per share with final pricing at ₹84. The issue opened for subscription from September 16-18, 2026.
Financial Performance
Financial performance shows consistent growth with revenue increasing from ₹10,643.86 million in FY24 to ₹11,883.51 million in FY26. Profit After Tax improved significantly from ₹170.35 million in FY24 to ₹411.68 million in FY26, with margins expanding from 1.60% to 3.46%. EBITDA grew from ₹826.76 million to ₹1,477.82 million over the same period. The company maintained a debt-to-equity ratio of 0.83 with total borrowings of ₹4,007.89 million as of FY26.
Use of Proceeds
The net proceeds of ₹5,619.88 million from the fresh issue will be utilized for: debt repayment (₹1,900 million, 33.8%), capital expenditure for capacity expansion at Gautam Buddha Nagar facility (₹2,000 million, 35.6%), and funding inorganic growth through acquisitions and strategic initiatives (₹1,719.88 million, 30.6%). The implementation schedule spans FY2027-2029 for capex and FY2027-2028 for acquisitions.
Risk Factors
Key risks include significant customer concentration (top 10 customers accounted for 72.89% of FY26 revenue), exposure to international markets (41.36% export revenue), dependence on limited suppliers for critical raw materials, intense competition in the global powertrain solutions industry, and various regulatory compliance requirements including environmental regulations and pending legal proceedings. The company also faces transition risks associated with the shift to electric vehicles.
Market & Industry Position
The company operates in a growing market with global two-wheeler industry expected to reach 20.5-22.5 million units by CY31 and EV penetration in motorcycles projected to increase from 2.0% in CY25 to 10.5-12.5% in CY31. Hero Motors competes with major global players including ZF Friedrichshafen AG, Musashi Co. Ltd., BorgWarner Inc., and domestic peers like Sona BLW Precision Forgings and Endurance Technologies. The company benefits from technological expertise, diversified customer base, and strategic partnerships including a joint venture with Yamaha Motors.
Corporate Structure & Management
The Munjal family are the promoters with Pankaj Munjal as Chairman. Pre-IPO promoter holding stands at 84.67% reducing to 61.08% post-offer. The management team is led by Amit Gupta as Managing Director and CEO with extensive industry experience. The company has several subsidiaries including Hewland Engineering Limited (transmission systems), HYM Drive Systems Private Limited (joint venture with Yamaha), Hero EDU Systems Private Limited (electric drive units), and Spur Technologies Private Limited (auto components).
Regulatory & Compliance
The IPO has received SEBI approval and in-principle listing approvals from BSE and NSE. The company has obtained various regulatory exemptions including for statutory lock-in requirements. Ongoing legal proceedings include a criminal complaint by Uttar Pradesh Pollution Control Board and various labor cases. CARE Ratings Limited has been appointed to monitor utilization of proceeds with quarterly reporting to the Audit Committee.