1 hr ago
Hero Motors IPO Opens Amid Mixed Brokerage Views on Valuation
Hero Motors is selling shares to the public through an IPO.
The company makes powertrain parts and systems for electric and non-electric vehicles.
It supplies automotive companies in India and several overseas markets.
Before the IPO, large investors bought shares worth Rs 300 crore.
The company earned Rs 41.17 crore in profit on revenue of Rs 1,216.74 crore in FY26.
Its shares were reportedly trading at a premium of Rs 19-20 in the grey market.
Some brokers believe the company can benefit from electric vehicles and international business.
Other brokers think the IPO is expensive and that relying heavily on a few customers is risky.
Investors therefore face a choice between possible long-term growth and limited valuation cushion.
Hero Motors raised Rs 300 crore from 24 anchor investors at Rs 84 per share before the IPO opened.
The company reported FY26 revenue of Rs 1,216.74 crore and net profit of Rs 41.17 crore.
The IPO reserves 50% for qualified institutional bidders, 15% for non-institutional investors and 35% for retail investors.
Its grey market premium was reported at Rs 19-20 per share, implying a potential 22-23% listing gain.
Brokerages are divided, with some recommending subscription for the long term while others cite high valuations and customer concentration.
- Who
- Hero Motors, an automotive technology company, and investors participating in its initial public offering.
- What
- The company’s IPO opened with a reported grey market premium of Rs 19-20 per share and mixed brokerage recommendations.
- Where
- Hero Motors is based in Ludhiana and operates across India, the United States, Europe and the ASEAN region.
- When
- The IPO opened on the date of the report; the shares are scheduled to list on Wednesday, September 23.
- Why
- The IPO offers investors exposure to Hero Motors’ electric and non-electric powertrain businesses, but analysts differ over its valuation, growth prospects and customer concentration.
Reasons to Subscribe
Reasons for Caution
Electric-mobility and international growth
Reasons to Subscribe
Supportive brokers point to Hero Motors’ expanding e-mobility portfolio, electric-bike powertrain position, global OEM relationships and operations in India, the United Kingdom and Thailand.
Reasons for Caution
Cautious brokers say the growth opportunity is already reflected in the valuation, leaving limited room for execution-related risks.
Profitability and business capabilities
Reasons to Subscribe
Brokerages highlight the company’s design, engineering, prototyping, validation and manufacturing capabilities, along with strong improvement in profitability.
Reasons for Caution
SBI Securities noted that revenue growth remained modest despite strong profitability growth, while Swastika Investmart said margins remained below key peers.
Valuation and customer concentration
Reasons to Subscribe
Some brokers view the IPO as a potential long-term opportunity despite its premium valuation, citing exposure to electric and internal-combustion-engine platforms.
Reasons for Caution
Critics cited post-issue valuation multiples ranging from roughly 69 to 92.6 times earnings, as well as concentration risks: the top customer contributed 36% of revenue and the top five contributed 61%.
Key facts
- Anchor investment
- Rs 300 crore raised from 24 anchor investors
- Anchor allocation price
- Rs 84 per equity share
- FY26 revenue
- Rs 1,216.74 crore
- FY26 net profit
- Rs 41.17 crore
- Grey market premium
- Rs 19-20 per share
- IPO allocation
- 50% QIBs, 15% NIIs and 35% retail investors
- Listing venues
- BSE and NSE
- Book-running lead managers
- ICICI Securities, DAM Capital Advisors and JM Financial
Quotes
Marwadi Financial Services
Brokerage firm providing an IPO recommendation
“Considering Hero Motor's expanding e-mobility portfolio, global OEM relationships, investments in technology and manufacturing capabilities and strong improvement in profitability, its growth prospects remain favourable; however, the current valuation leaves limited room for execution-related risks.”
businesstoday.in
“We assign a ‘subscribe with caution rating as it is among India’s leading solutions providers to the global E-Mobility industry, backed by diversified product and service offerings and a growing presence in electric bikes and premium two-wheelers.”
businesstoday.in
Sources
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