Vijaypd Ceutical Ltd. IPO

Hero Motors

• Hero Motors is coming out with a 100% book building; initial public offering (IPO) of 12,65,82,278 shares of face value Rs 10 each in a price band Rs 79-84 per equity share.
• Not more than 50% of the issue will be allocated to Qualified Institutional Buyers (QIBs), including 5% to the mutual funds. Further, not less than 15% of the issue will be available for the non-institutional bidders and the remaining 35% for the retail investors.
• The issue will open for subscription on September 16, 2026 and will close on September 18, 2026.
• The shares will be listed on BSE as well as NSE.
• The face value of the share is Rs 10 and is priced 7.90 times of its face value on the lower side and 8.40 times on the higher side.
• Book running lead managers to the issue are ICICI Securities, DAM Capital Advisors and JM Financial.
• Compliance officer for the issue is Sakshi Dureja. 

Profile of the company

Hero Motors is one of India’s leading automotive technology companies engaged in designing, developing, manufacturing and supplying highly engineered powertrain solutions catering to automotive original equipment manufacturers (OEMs) in United States, Europe, India and the Association of Southeast Asian Nations (ASEAN) region. The company is a fully integrated powertrain systems provider offering comprehensive solutions including services for designing, prototyping, validating, developing, and delivering system-level and component-level powertrain solutions for both electric as well as non-electric powertrains. The company’s offerings find application in two-wheelers, performance automotive, e-bikes, off-road vehicles, electric and hybrid cars, heavy duty vehicles, and electric vertical take-off and landing (eVTOL) categories.

The company is among the few companies that address the requirements of the premium ICE and performance ICE segment that require high-performance transmission systems capable of handling tough torque needs while keeping components lightweight. The company is a technology and innovation driven company and have made significant investments into its in-house design and engineering capabilities as well as forging technology partnerships with global players to enhance its expertise and product and service offerings.

The company is recognized for its leadership in the development and production of continuously variable transmissions (CVT), electric vehicle (EV) transmission, electric motors, integrated drive units and gear sets. The company is among the first companies in India to capitalize on the global e-bike powertrain opportunity and have a distinct first mover advantage in this industry. It is the only player manufacturing and exporting CVT hubs to global e-bike OEMs from India, and are the only manufacturer of integrated electric powertrain products for e-bikes in India.

Proceed is being used for: 

• Repayment/prepayment/redemption, in full or in part, of certain outstanding borrowings availed by the company
• Capital expenditure of the company through purchase of equipment required for expansion in capacity of its Gautam Buddha Nagar, Uttar Pradesh facility
• Funding inorganic growth through unidentified acquisitions and other strategic initiatives and general corporate purposes

Industry overview

The country's automobile industry is primarily comprised of five key segments: two-wheelers (2W), passenger vehicles (PV), commercial vehicles (CV), three-wheelers (3W), and tractors. During fiscal 2026, with a significant lead, two-wheelers emerged as the largest segment, accounting for 74.1% of the total auto industry by volume. Passenger vehicles followed, contributing 15.6% to the market share, while three-wheelers make up a smaller but notable 2.9% of vehicle sales in fiscal 2026. Fiscal 2026 recorded sales of 22.1 million units, supported by GST cuts in September 2025 along with continued rural market momentum with improved rural productivity, diversification towards horticultural crops, government income support schemes and structural measures taken by the government such as PM-KISAN, eNAM, Pradhan Mantri Fasal Bima Yojna (PMFBY) to name a few, aided rural income.

In fiscal 2026 the share of scooters increased to 38% from 36% during the same period last year. This upward trend can be attributed to several other factors, including the rising participation of women in the workforce and a growing preference for automatic transmission vehicles. Within the scooters segment, e-scooters witnessed growth at an accelerated pace and contributed a sizeable share of 16 to 17% to overall scooter sales in fiscal 2026. Launch of new models, government incentives, rising awareness, increased acquisition & operating costs for the ICE equivalents provided a boost to the EV sales during the fiscal 2021 to 2026 period. E-scooters clocked growth at 101% CAGR in the last 5 years and their penetration within the scooters segment rose from 1.0% in fiscal 2021 to 16 to 17% in fiscal 2026. On the other hand, the ICE scooter segment witnessed relatively slower growth amidst the increased vehicle prices (due to BS VI emission norms compliance), higher operating costs (fuel price hike), increased interest outgo as well as increased competition from EVs. During fiscal 2022 to fiscal 2026 period, ICE scooter sales grew at 9.8% CAGR.

In the overall domestic sales, motorcycles have maintained their leading position in the last 5 years, however, they lost some ground to scooters during the period. During the pandemic period of fiscal 2021 and fiscal 2022, amidst the lack of availability of public transportation, requirement of motorcycles continued especially for daily commute, thereby restricting their drop. Over the years, there has been a significant advancement in vehicle technology. Various new features have been added in internal combustion engines (ICE) and electric vehicles (EV), making them more appealing to the customers, especially the younger buyers. The EV segment has revolutionised the industry in terms of latest technological designs and offerings and ICE vehicles are following with notable advancements. During fiscal 2022 to 2026, ICE segment grew at a moderate 11.3% CAGR. However, EV retails grew with 54.4% CAGR for the same period. For fiscal 2026, EV penetration reached around 6.5% and EV volumes recorded 1.44 million units. Going forward, the industry is expected to continue its growth momentum over the long-term horizon led by the positive microeconomic and macroeconomic environment, favourable rural demand, premiumization, intermittent launches, shrinking replacement cycle and continued support from financers.

Pros and strengths 

Strong positioning in global E-Mobility market: The company is one of India’s leading solutions providers to global e-mobility industry with its revenue from sales to e-mobility industry being Rs 2,732.90 million, Rs 1,755.92 million and Rs 1,280.85 million, accounting for 23.00%, 16.12% and 12.03%, respectively of its revenue from operations for Fiscal 2026, 2025 and 2024, respectively. Precision and powertrain flexibility characterize its offerings, positioning it to leverage global trends. The company has supplied EV transmission components for a US-based EV OEM and a European EV supercar manufacturer, showcasing its expertise in this segment. It is among the few companies globally that design high-performance transmission systems capable of handling tough torque needs while keeping components lightweight and meeting noise, vibration and harshness (NVH) requirements of electric vehicles.

Growing presence across premium mobility segments: Over the last five years, the company has expanded its market presence across automotive segments and have grown its business with premium two-wheeler OEMs globally. In the premium two-wheeler segment, it has partnered with OEMs such as BMW, Ducati and a leading American two-wheeler OEM among others, for Powertrain Solutions covering design, development, prototyping, validation and high-volume manufacturing. Further, the company has capabilities to deliver complete system solutions for e-bikes, including design, development, and cost-effective solutions, all while maintaining stringent quality standards. The electrification of bicycles and two-wheelers is witnessing robust global growth, driven by environmental concerns, health awareness, and technological advancements.

Diversified and premium customer portfolio: The company has a diverse and premium customer base, serving clients both in India and internationally. Its global OEM portfolio includes a wide range of customers, spanning both automotive and non-automotive sectors. In the automotive sector, it collaborates with global two-wheeler OEMs including BMW, Ducati, and Hero MotoCorp; players from motor sport industries such as Formula Motorsport and HWA Engineering; global commercial vehicle and off-road OEMs such as Escorts; and enviolo. The company’s customers in the non-automotive segment for both electric and non-electric powertrain and transmission systems include global OEMs such as B&S, and various e-powertrain applications for supercar manufacturers.

Strong global manufacturing and precision engineering capabilities: The company’s operational strength extends worldwide as it strategically establishes manufacturing and assembly facilities to meet diverse market and customer demands. Strategic geographic dispersion of its G&T facilities across India, the United Kingdom, and Thailand allows it to be in close proximity to its customers and offer cost competitive solutions. The company’s facilities, located in Gautam Buddha Nagar, Uttar Pradesh, India, boast precision manufacturing setups, including advanced technologies such as teeth honing, teeth grinding, and laser welding machines. The infrastructure is modern, and its processes are well-developed, allowing it to manufacture precise EV gears. 

Risks and concerns

High revenue concentration among top customers: The company’s business largely depends upon its top 10 customers. In Fiscals 2026, 2025 and 2024 its revenue from operations from top 10 customers were Rs 8,661.40 million, Rs 8,501.96 million and Rs 8,191.86 million, representing 72.89%, 78.03% and 76.96% of its revenue from operations, respectively. The loss of any of these customers could have a material adverse effect on its business, financial condition, results of operations and cash flows.

Geographic concentration in European markets: The company generates a portion of its revenue from operations from jurisdictions outside India, in particular, from Europe which contributed 33.59%, 28.45% and 29.33%, of its revenue from operations, in Fiscal 2026, 2025 and 2024, respectively. Any adverse events affecting these jurisdictions could have an adverse impact on its revenue from operations.

Significant capital expenditure and working capital needs: The company has substantial capital expenditure and working capital requirements and may require additional capital and financing in the future and its operations could be curtailed if it is unable to obtain the required additional capital and financing when needed.

Exposure to risks associated with UK subsidiary: The company derives a portion of its revenue from operations from its Material Subsidiary; HEL located in the United Kingdom. The company acquired 32% equity stake in HEL in September 2022 from Hero International B.V., a member of the Promoter Group, which had been associated with HEL since 2017, and it acquired a majority stake by acquiring 19% equity stake in February 2023. HEL specialises in transmission design technology and has an established motorsport customer base. In the event there is any adverse impact on the business operations of HEL, its business, results of operations, cash flows and financial condition may be adversely affected.

Outlook

Hero Motors Limited is an automotive technology company engaged in designing, developing, manufacturing and supplying engineered powertrain solutions to automotive original equipment manufacturers (OEMs) across the United States, Europe, India and ASEAN region. The company provides integrated solutions for both electric and non-electric powertrains, serving two-wheelers, performance automotive, e-bikes, off-road vehicles, electric and hybrid cars, heavy-duty vehicles and eVTOL applications. The company has strong R&D and engineering capabilities. It has diversified powertrain product and service offerings. On the concern side, the company derives a certain portion of its revenue from operations from its Material Subsidiary, Hewland Engineering Limited (HEL). In the event there is any adverse impact on the business operations of HEL, its business, results of operations, cash flows and financial condition may be adversely affected. Moreover, certain of its Subsidiaries have suffered losses in the last three Fiscals. There can be no assurance that its subsidiaries will be profitable in future, or that it will be able to benefit from the funds it has infused in them.

The issue has been offering 12,65,82,278 shares in a price band of Rs 79-84 per equity share. The aggregate size of the offer is around Rs 1000.00 crore to Rs 1063.29 crore based on lower and upper price band respectively. Minimum application is to be made for 178 shares and in multiples thereof thereafter. On performance front, the company’s revenue from operations increased by 9.06% from Rs 10,895.93 million in Fiscal 2025 to Rs 11,883.51 million in Fiscal 2026, primarily on account of an increase in offtake from certain Indian and international customers. Moreover, profit for the year increased to Rs 411.68 million in Fiscal 2026 compared to Rs 327.96 million in Fiscal 2025.

Meanwhile, the company’s strategic objective is to further increase the collective contribution from systems and e-mobility-related products and services. To achieve this goal, it is currently implementing a series of initiatives. It is focused on making further investments in its technology centers and developing full powertrain solutions tailored for EVs. EVs require an integrated transmission system to optimize their performance, efficiency, and driving experience. The company has invested with the setup of its technology centers and are fully equipped to delivering end-to-end powertrain solutions. With the aim to expand its capabilities in terms of assembling systems and gain expertise to be prepared for the e-mobility products, it acquired strategic stake in Hewland in 2022 and acquired majority stake in 2023 from Hero International B.V which had been associated with Hewland since 2017. The company intends to further leverage Hewland’s expertise to launch customizable solutions for EV OEM.