Hero Motors, the automotive engineering and powertrain technology arm promoted by O P Munjal Holdings, is preparing to enter the Indian public markets with a ₹1,000 crore IPO.
The company operates differently from a traditional vehicle manufacturer. Instead of selling finished motorcycles or cars under its own consumer brand, Hero Motors develops and manufactures powertrain systems, gears, transmissions, electric powertrain products and metallic components for global automotive original equipment manufacturers (OEMs).
Its products are used across two-wheelers, performance vehicles, e-bikes, electric vehicles, heavy-duty vehicles and emerging applications such as eVTOL aerospace systems.
The company has six manufacturing facilities across India, the United Kingdom and Thailand and supplies global customers across the US, Europe, India and ASEAN markets.
Financially, FY26 presented a mixed picture. Total income stood at ₹1,216.74 crore, while PAT was ₹41.17 crore. Revenue increased by 9% compared with FY25, but PAT declined by 26%.
At the same time, operating cash flow improved sharply to around ₹144 crore in FY26 from ₹48 crore in FY25. However, investors should examine the composition of this improvement because the increase was mainly influenced by movements in other financial liabilities.
The IPO therefore presents a combination of global OEM relationships, EV exposure, integrated engineering capabilities and expansion plans, but also comes with customer concentration, raw-material exposure, execution and profitability risks.
On this page
Key Takeaways
- Hero Motors is an automotive engineering and powertrain technology company rather than a conventional vehicle manufacturer.
- The company provides end-to-end capabilities from design and prototyping to manufacturing.
- Its products cover both electric and conventional powertrains.
- Hero Motors has six manufacturing facilities across India, the UK and Thailand.
- The company supplies global OEM customers across the US, Europe, India and ASEAN.
- FY26 total income stood at ₹1,216.74 crore and PAT at ₹41.17 crore.
- Revenue increased by 9% in FY26, while PAT declined by 26%.
- CFO increased from ₹48 crore to approximately ₹144 crore, although the improvement was influenced mainly by other financial liabilities.
- The largest customer contributed 35.57% of revenue from operations in FY26.
- Europe contributed 33.59% of revenue, while two-wheelers accounted for 41%.
- The IPO comprises ₹600 crore of fresh issue and ₹400 crore of OFS.
- Fresh funds will be used for debt repayment, capacity expansion and strategic/inorganic growth initiatives.
- Investors should evaluate the company’s OEM concentration, margins, cash-flow quality and EV transition plans alongside its growth opportunity.
Hero Motors Company Overview
Hero Motors is an Indian automotive engineering company focused on powertrain and mobility technology.
The company develops solutions for both traditional internal-combustion-engine vehicles and electric mobility applications.
Its capabilities cover the complete product development cycle, including:
- Engineering and design
- Product development
- Prototyping
- Testing
- Manufacturing
- System integration
The company’s products are used across multiple mobility applications, including:
- Two-wheelers
- Performance vehicles
- E-bikes
- Electric vehicles
- Heavy-duty vehicles
- Automotive applications
- Emerging eVTOL aerospace applications
This positioning allows Hero Motors to participate in the technology and component side of the automotive value chain rather than depending solely on selling complete vehicles.
Hero Motors Business Model
Hero Motors’ operations are divided into two broad areas:
1. Powertrain Solutions
This segment includes:
- Gears and transmissions
- Bike powertrain solutions
- Electric powertrain products
The company works with OEMs that require engineered powertrain components and systems.
Its ability to work on both electric and conventional powertrains gives it exposure to the ongoing transition in the global automotive industry.
2. Alloys & Metallics
Hero Motors also operates in alloys and metallic components used in automotive applications.
This gives the company another revenue stream alongside its core powertrain business.
Hero Motors and Electric Mobility
One of the key parts of the Hero Motors investment story is its exposure to electric mobility.
The company is positioned as a pioneer in India’s e-bike powertrain market and is described as the only manufacturer from India exporting CVT hubs and integrated electric powertrain products for e-bikes globally.
Its technology is relevant to several areas of mobility, including:
- E-bikes
- Electric two-wheelers
- EV powertrains
- Advanced mobility systems
The company’s strategy is therefore not limited to traditional internal-combustion technology.
However, EV exposure by itself does not guarantee future growth. Investors should also examine how quickly the company’s customers adopt EV technologies, how competitive pricing becomes and whether Hero Motors can generate attractive margins from these products.
Global Presence and OEM Customers
Hero Motors has six manufacturing facilities located across:
- India
- United Kingdom
- Thailand
The company serves OEM customers across:
- United States
- Europe
- India
- ASEAN
Its customer base includes names such as:
- BMW AG
- Ducati Motor Holding
- Enviolo International Inc
- Formula Motorsport
- HUMMINGBIRD Inc
- HWA AG
Established relationships with recognised global customers can provide credibility and create opportunities for repeat business.
However, customer concentration remains an important consideration, as a significant portion of revenue comes from its largest customer.
Hero Motors Revenue Concentration
In FY26, the company’s largest single customer contributed approximately ₹422.74 crore, representing around 35.57% of revenue from operations.
This is a significant concentration.
A simple example explains the risk.
If one customer contributes more than one-third of revenue, losing a major order from that customer can have a meaningful impact on overall sales.
Therefore, investors should monitor:
- Customer retention
- Order visibility
- New customer additions
- Volume commitments
- Pricing arrangements
- Customer diversification
The presence of large global OEMs is a strength, but dependence on individual customers can also increase business risk.
Geographic Revenue Concentration
Europe was the company’s largest export region in FY26, contributing approximately 33.59% of revenue.
This gives Hero Motors meaningful exposure to the European automotive industry.
At the same time, geographic concentration means changes in:
- European vehicle demand
- Economic conditions
- Currency movements
- Trade policies
- Automotive regulations
- EV adoption
could affect the company’s performance.
Hero Motors Financial Performance
Hero Motors delivered mixed financial performance in FY26.
| Financial Metric | FY26 |
| Total Income | ₹1,216.74 crore |
| PAT | ₹41.17 crore |
| Revenue Growth vs FY25 | 9% |
| PAT Growth vs FY25 | -26% |
| CFO | ₹144 crore |
| Previous-Year CFO | ₹48 crore |
Revenue increased by approximately 9%, indicating continued business growth.
However, profit after tax declined by approximately 26%.
This divergence between revenue and profit is important.
It suggests that investors should look beyond topline growth and understand what is happening with:
- Operating costs
- Raw-material prices
- Product mix
- Customer pricing
- Manufacturing costs
- Depreciation
- Finance costs
A company can grow revenue while simultaneously experiencing pressure on profitability.
Operating Cash Flow: A Positive but Important Nuance
Hero Motors’ CFO increased sharply from approximately ₹48 crore in FY25 to ₹144 crore in FY26.
At first glance, this looks like a strong improvement in cash generation.
However, investors should not automatically interpret the entire increase as an improvement in underlying operating profitability.
The FY26 increase was mainly influenced by movements in other financial liabilities.
This distinction matters because changes in working capital and liabilities can temporarily increase operating cash flow even when underlying earnings growth is weaker.
Therefore, investors should examine cash-flow performance over multiple years rather than relying on a single year’s CFO.
Hero Motors IPO 2026: Issue Structure
The company is planning to raise approximately ₹1,000 crore through a combination of fresh equity and an Offer for Sale.
| IPO Component | Amount |
| Fresh Issue | ₹600 crore |
| Offer for Sale | ₹400 crore |
| Total Issue Size | ₹1,000 crore |
The fresh issue will provide capital directly to Hero Motors, while the OFS component will allow existing shareholders to sell part of their holdings.
This makes the issue different from a 100% OFS IPO because a substantial portion of the money raised will actually go to the company.
Hero Motors IPO: Selling Shareholders
The promoter group is expected to participate in the OFS.
O P Munjal Holdings
O P Munjal Holdings is expected to sell shares worth approximately ₹395 crore.
Its shareholding is expected to decline to approximately 49.34% from 70.6% following the issue.
Hero Cycles
Hero Cycles is expected to sell shares worth approximately ₹5 crore.
Its stake is expected to decline to around 1.56% from 2%.
The reduction in promoter ownership is therefore primarily driven by O P Munjal Holdings’ larger OFS contribution.
Hero Motors IPO: Utilisation of Fresh Issue Proceeds
The company plans to use the fresh IPO proceeds for three broad purposes.
| Purpose | Amount | Approx. Share |
| Repayment / Prepayment of Borrowings | ₹285 crore | 35.63% |
| Capacity Expansion – U.P. Facility | ₹237 crore | 29.63% |
| Inorganic Growth, Strategic Initiatives & GCP | ₹278 crore | 34.74% |
Debt Repayment
Approximately ₹285 crore will be used for repayment or prepayment of borrowings.
Reducing debt can help lower future finance costs and strengthen the company’s balance sheet.
Capacity Expansion
Around ₹237 crore is planned for capacity expansion at the Uttar Pradesh facility.
This indicates that the company expects additional manufacturing capacity to support future demand.
Strategic and Inorganic Growth
Approximately ₹278 crore is earmarked for inorganic growth, strategic initiatives and general corporate purposes.
This provides flexibility for future expansion opportunities.
Hero Motors IPO Dates and Price
Based on the IPO details provided:
| IPO Detail | Information |
| Company | Hero Motors |
| Total Issue Size | ₹1,000 crore |
| Fresh Issue | ₹600 crore |
| OFS | ₹400 crore |
| Price Band | ₹79–₹84 per share |
| IPO Opening | 16 September 2026 |
| IPO Closing | 23 September 2026 |
| Allotment | 21 September 2026 |
| Expected Listing | 23 September 2026 |
| Lot Size | 178 shares |
| Minimum Investment | ₹14,952 |
Note: The dates and issue details should be checked against the final official IPO documents because IPO timelines and terms can change.
Hero Motors IPO Anchor Investor Timeline
The one-day anchor book is expected to open on 15 September 2026 for institutional investors.
Anchor participation can provide an indication of institutional interest before the public issue opens.
However, anchor participation should not by itself be treated as evidence that the IPO is attractively valued.
Investors should still assess the company’s financial performance and IPO valuation.
Strengths of Hero Motors
1. Strong Promoter Background
The company is backed by promoters with long-standing experience in the automotive sector.
Industry experience can provide valuable relationships, technical knowledge and understanding of OEM requirements.
Invest Smarter.
Grow Confidently.
Your AI-powered SEBI-registered investment advisor — with research you can trust and insights that grow with you.
Download inXits Free
2. Exposure to EV and ICE Powertrains
Hero Motors operates across both electric and conventional powertrain solutions.
This provides exposure to the automotive industry’s transition towards electrification while retaining participation in existing ICE applications.
3. Global OEM Relationships
The company supplies recognised global automotive customers.
Such relationships can potentially provide:
- Repeat orders
- Technology collaborations
- Product development opportunities
- International expansion
4. Integrated Engineering Capabilities
Hero Motors provides capabilities spanning design, engineering, prototyping and manufacturing.
This integrated model can make it easier for OEM customers to work with the company across multiple stages of product development.
5. Global Manufacturing Footprint
Operations across India, the UK and Thailand give Hero Motors an international manufacturing presence.
This can help the company serve customers across different regions and potentially reduce dependence on a single manufacturing location.
6. Exposure to Long-Term Mobility Trends
The company is positioned around several structural themes:
- Vehicle electrification
- E-bike adoption
- Advanced powertrains
- Lightweight engineering
- Global mobility technology
These trends could create long-term opportunities if Hero Motors successfully converts them into profitable orders.
Key Risks in Hero Motors IPO
1. High Customer Concentration
The largest customer contributed approximately 35.57% of revenue from operations in FY26.
Such concentration means the company could be materially affected if a major customer reduces orders, changes suppliers or renegotiates commercial terms.
2. European Market Exposure
Europe contributed approximately 33.59% of revenue.
A slowdown in the European automotive market or changes in regulations and consumer demand could therefore affect the company.
3. Two-Wheeler Concentration
Two-wheelers represented approximately 41% of revenue, making them the largest end-use segment.
This provides exposure to a large mobility category but also creates dependence on two-wheeler production and demand trends.
4. Raw-Material Price Volatility
Automotive powertrain and metal-component manufacturing requires various raw materials.
Changes in commodity prices can increase production costs.
If the company cannot fully pass these increases on to customers, margins could come under pressure.
5. Supply-Chain Disruptions
Manufacturing depends on the timely availability of materials and components.
Supply disruptions can lead to:
- Production delays
- Higher input costs
- Missed delivery schedules
- Customer dissatisfaction
This is particularly relevant when supplying global OEM customers with strict delivery requirements.
6. Capacity Expansion Risk
The company plans to invest approximately ₹237 crore in its Uttar Pradesh facility.
Capacity expansion can support growth, but it also creates execution risk.
Investors should monitor whether the new capacity is commissioned on time and whether sufficient customer demand exists to utilise it efficiently.
7. EV Transition Risk
EV adoption represents an opportunity for Hero Motors, but the transition also carries uncertainty.
Technology can evolve quickly, while OEMs may change:
- Powertrain architecture
- Supplier relationships
- Product specifications
- Manufacturing strategies
Hero Motors therefore needs to continuously invest in technology and maintain its competitiveness.
8. Profitability Decline
Although revenue increased by 9% in FY26, PAT declined by approximately 26%.
This is an important signal.
Investors should understand why profit declined despite topline growth and whether the pressure is temporary or structural.
9. Cash-Flow Quality
CFO increased significantly in FY26, but the improvement was mainly influenced by other financial liabilities.
Therefore, investors should avoid evaluating cash generation using FY26 CFO alone.
A multi-year view of operating cash flow and working-capital movements would provide a clearer picture.
Hero Motors IPO: What Investors Should Evaluate
Before evaluating the IPO, investors can focus on five major questions.
1. Can Hero Motors Diversify Its Customer Base?
With the largest customer contributing 35.57% of revenue, customer diversification will be important.
The company’s ability to add new global OEMs can reduce concentration risk over time.
2. Can Revenue Growth Translate Into Profit Growth?
FY26 revenue grew, but PAT declined.
Investors should therefore track margins and earnings growth rather than relying solely on topline expansion.
3. Will New Capacity Generate Adequate Returns?
The planned Uttar Pradesh capacity expansion is a significant use of IPO proceeds.
Investors should evaluate whether the investment can generate sufficient incremental revenue and profitability.
4. Can the Company Benefit From EV Growth?
EV exposure is one of the company’s key growth opportunities.
The important question is whether this exposure can translate into sustainable, profitable business with global OEM customers.
5. Is the IPO Valuation Reasonable?
A good business can still be an expensive investment.
Investors should compare the final IPO valuation with:
- Earnings
- Revenue growth
- Profit margins
- Cash generation
- Debt
- Automotive component peers
- Global powertrain businesses
Hero Motors IPO: Business Opportunity vs Risk
Hero Motors presents an interesting combination of traditional automotive engineering and emerging mobility technology.
On one side, the company has:
- Global OEM relationships
- International manufacturing operations
- EV exposure
- Integrated engineering capabilities
- Experienced promoters
- Long-term mobility opportunities
On the other side, investors need to consider:
- Customer concentration
- Geographic concentration
- Two-wheeler exposure
- Raw-material volatility
- Capacity expansion execution
- EV transition uncertainty
- Declining FY26 PAT
- The quality and sustainability of cash-flow improvement
This makes the IPO more nuanced than simply an EV-growth story.
How InXits Can Help Investors Evaluate IPO Opportunities
IPO investing requires more than looking at the brand name or the expected market excitement.
For a company like Hero Motors, investors need to understand the relationship between OEM demand, customer concentration, margins, debt, cash flow, capacity utilisation and EV transition opportunities.
As a financial advisor in Ahmedabad, InXits focuses on structured analysis of financial performance, business fundamentals, valuation factors and risks so investors can make decisions based on their financial goals and risk profile rather than short-term market sentiment.
The objective is to understand both the potential opportunity and the downside risks before making an investment decision.
Conclusion
The Hero Motors IPO gives investors an opportunity to participate in an automotive engineering company positioned at the intersection of powertrain technology, global OEM manufacturing and electric mobility.
The company has several notable strengths, including established relationships with global OEMs, an integrated design-to-manufacturing model, international operations and exposure to both EV and conventional powertrain technologies.
Its FY26 performance, however, presents a mixed picture.
Total income reached ₹1,216.74 crore, and revenue increased by 9%, but PAT declined by 26% to ₹41.17 crore. Operating cash flow improved sharply to approximately ₹144 crore, although investors should examine the impact of other financial liabilities when assessing the quality of this improvement.
The company’s biggest challenges include customer concentration, European and two-wheeler exposure, raw-material volatility and execution risks around capacity expansion and EV-related growth.
The IPO also provides a meaningful amount of fresh capital, with ₹285 crore planned for debt repayment and ₹237 crore for capacity expansion.
Ultimately, investors should not evaluate Hero Motors only on its EV positioning or global customer names. The more important questions are whether the company can diversify customers, improve profitability, utilise new capacity effectively and convert its technology capabilities into sustainable cash-generating growth.
The final IPO valuation will be particularly important in determining whether the growth opportunity adequately compensates investors for the risks involved.
Frequently Asked Questions About Hero Motors IPO 2026
1. What is the Hero Motors IPO?
Hero Motors IPO is the proposed public issue of Hero Motors, an automotive engineering and powertrain technology company promoted by O P Munjal Holdings.
2. What is the Hero Motors IPO size?
The total IPO size is approximately ₹1,000 crore, consisting of a ₹600 crore fresh issue and ₹400 crore Offer for Sale.
3. What is the Hero Motors IPO price band?
The IPO price band is provided as ₹79 to ₹84 per share.
4. When will the Hero Motors IPO open?
Based on the provided IPO schedule, the issue is expected to open for bidding on 16 September 2026.
5. What is the Hero Motors IPO lot size?
The lot size is 178 shares.
6. What is the minimum investment in Hero Motors IPO?
At the upper price band of ₹84, one lot of 178 shares requires an investment of approximately ₹14,952.
7. How will Hero Motors use the IPO proceeds?
The fresh issue proceeds are planned for debt repayment/prepayment, capacity expansion at the Uttar Pradesh facility, inorganic growth, strategic initiatives and general corporate purposes.
8. Who are Hero Motors’ customers?
The company serves global OEM customers including BMW AG, Ducati Motor Holding, Enviolo International Inc, Formula Motorsport, HUMMINGBIRD Inc and HWA AG.
9. What are the major risks of Hero Motors IPO?
Key risks include customer concentration, European market exposure, two-wheeler concentration, raw-material price volatility, supply disruptions, capacity expansion execution and uncertainty around the EV transition.
10. Should investors invest in Hero Motors IPO?
Investors should make this decision based on the final valuation, their risk profile, investment horizon and financial objectives. The company’s growth opportunities should be weighed against customer concentration, profitability and cash-flow risks rather than relying only on the EV or automotive theme.
Disclaimer
This article is intended solely for educational and informational purposes and should not be considered investment advice, a recommendation, solicitation or assurance of returns.
IPO details, including the price band, issue size, dates, allotment schedule and other terms, may change. Investors should refer to the final offer documents and official exchange/regulatory disclosures for the latest information.
Investments in securities are subject to market risks. Past performance does not guarantee future results. Investors should evaluate their financial objectives, investment horizon and risk tolerance before making any investment decision and consult a qualified professional where appropriate.
Megha Joshi is a Research Analyst at inXits with 2.5 years of focused experience in equity markets. She conducts in-depth stock research and market analysis to support data-backed investment decision-making for clients.
