Hero Motors IPO opens today with Rs 19 GMP. Should investors subscribe?

Hero Motors' Rs 1,000-crore IPO has opened for subscription from September 16 to 18. A Rs 19 grey market premium points to listing interest, while investors weigh improving finances against concentration and raw material risks.

Hero Motors IPO opens for subscription today, September 16, with the company looking to raise Rs 1,000 crore from the public issue.

The IPO will remain open until September 18, with the shares proposed to be listed on both the NSE and BSE on September 23.

The Hero Motors IPO price band has been fixed at Rs 79-84 per share. The lot size is 178 shares, which means a retail investor will need a minimum of Rs 14,952 to apply for one lot at the upper end of the price band. The issue comprises a fresh issue of shares worth Rs 600 crore and an offer for sale of Rs 400 crore. The IPO is a book-built issue.

The grey market premium, or GMP, for Hero Motors IPO stood at Rs 19 as of 7:55 am on September 16, according to the data shared.

At the upper price band of Rs 84, a GMP of Rs 19 implies an estimated listing price of around Rs 103. That indicates a potential listing premium of 22.62% over the issue price.

However, GMP is an unofficial market indicator and does not guarantee the actual listing price or returns.

The GMP has also moderated from Rs 24 on September 12 and 13 to Rs 23 on September 14 and Rs 19 on September 15 and 16. The trend therefore shows that the grey market premium has cooled in the days leading up to the IPO opening.

WHAT IS HERO MOTORS' BUSINESS?

Hero Motors is an automotive technology company that designs, develops and manufactures engineered powertrain solutions for global original equipment manufacturers across the US, Europe, India and ASEAN.

Its portfolio covers electric vehicles, internal combustion engine and hybrid vehicles across two-wheelers, e-bikes, performance vehicles, off-road vehicles, heavy-duty vehicles and eVTOL vehicles. Its customers include BMW, Ducati, enviolo, Formula Motorsport, Hummingbird EV and HWA.

The company operates through its Powertrain Solutions and Alloys & Metallics businesses. It has expertise in CVTs, EV transmissions, electric motors, integrated drive units and gear sets, while the company also highlights its first-mover position in e-bike powertrains.

As of March 31, 2026, Hero Motors had six manufacturing facilities across India, the UK and Thailand, along with technology centres in the UK and Gautam Buddha Nagar, Uttar Pradesh. It is also setting up additional facilities in Ludhiana and Bengaluru.

Hero Motors has shown improvement in its financial performance over the last three financial years.

Revenue from operations increased from Rs 1,064.39 crore in FY24 to Rs 1,089.59 crore in FY25 and Rs 1,188.35 crore in FY26. EBITDA rose from Rs 86.28 crore in FY24 to Rs 114 crore in FY25 and Rs 147.78 crore in FY26.

The EBITDA margin also improved from 8.11% in FY24 to 10.46% in FY25 and 12.44% in FY26.

Profit after tax increased from Rs 17.04 crore in FY24 to Rs 32.80 crore in FY25 and Rs 41.17 crore in FY26.

The company generated operating cash flow of Rs 144.04 crore in FY26, compared with Rs 48.34 crore in FY25. Total borrowings stood at Rs 400.79 crore as of FY26.

WHAT ARE THE RISKS FOR HERO MOTORS IPO?

There are several factors investors need to consider before subscribing.

Hero Motors has significant exposure to overseas markets, with Europe accounting for 29.33% of revenue in FY24, 28.45% in FY25 and 33.59% in FY26.

Customer concentration is another risk. Its top 10 customers contributed 72.89% of revenue in FY26, compared with 78.03% in FY25 and 76.96% in FY24.

The company is also exposed to fluctuations in the cost and availability of steel, its primary raw material. The report also flags limited suppliers and the absence of firm supply agreements as potential risks to raw material availability and operations.

The Rs 600 crore fresh issue will provide funds for several purposes, including repayment or prepayment of certain borrowings, capital expenditure for capacity expansion at the Gautam Buddha Nagar facility, inorganic growth through unidentified acquisitions and other strategic initiatives, along with general corporate purposes.

SHOULD YOU SUBSCRIBE TO HERO MOTORS IPO?

There is no single answer for every investor, but the IPO has a mix of positive factors and risks that need to be weighed before applying.

The positives include Hero Motors' exposure to both traditional and electric powertrain technologies, relationships with global OEMs, expanding manufacturing footprint and improving financial performance.

"Hero Motors Limited is well positioned to benefit from both trends through its Powertrain Solutions and Alloys & Metallics (A&M) segments. Its Powertrain Solutions business, comprising Gears & Transmissions (G&T) and Bike Powertrain (BPT), offers expertise in continuously variable transmissions, electric vehicle transmissions, electric motors, integrated drive units and gear sets, providing exposure to both ICE and EV platforms," said Master Capital Services Limited.

"Its first-mover advantage in e-bike powertrains further strengthens its positioning in the rapidly expanding electric mobility segment. Investors may consider the IPO as a potential long-term investment opportunity," the report further said.

Hero Motors IPO opens on September 16 and closes on September 18. The basis of allotment is expected on September 21, refunds are scheduled for September 22 and shares are expected to be credited to demat accounts on September 22. The tentative listing date is September 23.

The issue has a 50% reservation for qualified institutional buyers, 15% for non-institutional investors and 35% for retail investors.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)