Published: 11 September 2026 | 6.00 AM
Last Updated: 11 September 2026 | 6.00 AM
IPO Objectives
Hero Motors proposes to use the fresh issue proceeds for the following purposes:
| Utilisation | Amount |
|---|---|
| Repayment or prepayment of borrowings | Rs. 190 Crore |
| Equipment for Gautam Buddha Nagar facility | Rs. 200 Crore |
| Acquisitions, strategic initiatives and general corporate purposes | Balance Amount |
Debt repayment should reduce finance costs, while the proposed equipment purchase will expand manufacturing capacity. Funds allocated to acquisitions provide flexibility, although the company has not identified any specific acquisition target.
IPO Valuation
| Valuation Parameter | Pre-IPO | Post-IPO |
|---|---|---|
| EPS | Rs. 1.08 | Rs. 0.91 |
| P/E Ratio | 77.78 Times | 92.31 Times |
| Market Capitalisation | Rs. 3,215 Crore | Rs. 3,815.41 Crore |
| NAV | – | Rs. 12.72 |
| Price-to-Book Value | – | 6.60 Times |
The post-issue earnings dilution reduces EPS to Rs. 0.91. Consequently, the P/E rises to 92.31 times. This valuation requires strong and sustained growth in earnings, margins and cash flows.
Comparison with Recently Listed Peers
| Company | Issue Price | P/E | Listing Gain |
|---|---|---|---|
| Dhoot Transmission | Rs. 871 | 41.36 | 36.29% |
| SEDEMAC Mechatronics | Rs. 1,352 | 126.91 | 7.33% |
| Tenneco Clean Air India | Rs. 397 | 28.97 | 23.63% |
Recent auto-component IPOs delivered positive listing returns, but their valuations varied significantly. Hero Motors is valued above Dhoot Transmission and Tenneco Clean Air India but below SEDEMAC Mechatronics. Investors should not rely only on sector sentiment because listing performance also depends on demand and market conditions.
Shareholding Structure
| Category | Pre-IPO | Post-IPO |
|---|---|---|
| Promoter and Promoter Group | 84.67% | 61.63% |
| Public Shareholding | 15.33% | 38.37% |
Promoter holding will decline considerably after the issue but will remain above 60%. O.P. Munjal Holdings is selling shares worth Rs. 395 crore, while Hero Cycles Ltd. is selling shares worth Rs. 5 crore.
Application Details
| Investor Category | Lots | Shares | Amount |
|---|---|---|---|
| Retail Minimum | 1 | 178 | Rs. 14,952 |
| Retail Maximum | 13 | 2,314 | Rs. 1,94,376 |
| Small HNI Minimum | 14 | 2,492 | Rs. 2,09,328 |
| Big HNI Minimum | 67 | 11,926 | Rs. 10,01,784 |
Retail investors may bid for up to 13 lots. Applications should be submitted only at the cut-off price to avoid rejection caused by an incorrectly selected bid price.
Final Verdict: Should You Apply?
Hero Motors possesses engineering capabilities, global customer relationships and exposure to electric mobility. Debt reduction and capacity expansion could improve its future operating performance.
Nevertheless, the premium valuation leaves little room for execution disappointments. Investors seeking listing gains should monitor GMP, QIB demand and overall subscription closely. Long-term investors may consider the IPO selectively only if they are comfortable with valuation and automotive-sector risks.
Final Recommendation: 🟡 Selective Apply