Business Desk – Hero Motors IPO Update: The Rs 1000 crore IPO of auto components and advanced mobility manufacturer Hero Motors will open for subscription on September 16. Investors will be able to bid in the price band of Rs 79 to 84 per share.
Along with issuing new shares in IPO, existing shareholders will also sell their stake through Offer for Sale (OFS). At present there is not much movement regarding the stock in the gray market. In such a situation, it is more important for investors to understand the business and financial position of the company rather than GMP.
Will be able to bid from 16th to 18th September
Time to invest in Hero Motors IPO will be from 16th September to 18th September. Its lot size is 178 shares. That means, according to the upper price band of Rs 84, approximately Rs 14,952 will have to be spent for one lot. New equity shares worth Rs 600 crore will be issued in a total issue of Rs 1000 crore.
Shares worth Rs 400 crore will be sold through OFS. 35% of the IPO is reserved for retail investors. Whereas 50% share has been kept for Qualified Institutional Buyers (QIB) and 15% share has been kept for Non-Institutional Investors (NII).
Allotment on 21st September, entry in stock market on 23rd
The allotment of shares will be done on September 21 after the closing of the IPO. Investors who will receive shares are expected to have their shares credited to their demat accounts on September 22. After this, Hero Motors shares will be listed in the market on 23 September.
Where will the money for new shares worth Rs 600 crore go?
The company will use Rs 600 crore of new shares received from IPO for various needs. In this, about Rs 190 crore will be spent in reducing debt.
About Rs 200 crore will be spent on increasing the capacity of the company's facility located in Gautam Buddha Nagar, Uttar Pradesh. The remaining amount will be used for acquisitions and general corporate purposes.
At the same time, the company will not get the amount received from selling shares through OFS. This money will go to the existing shareholders selling shares. In this, OP Munjal Holdings is selling shares worth about Rs 395 crore.
Manufactures products for companies like BMW and Ducati
Hero Motors is an automotive technology company. Apart from India, the company produces products for automobile manufacturers in America, Europe and Asia. Its business is primarily in Powertrain Solutions and Alloys & Metallics (A&M) segments. The company's customers include names like BMW, Ducati and Hummingbird EV.
Profit speed more than 55%
According to the company's financial data, the net profit of Hero Motors increased at a CAGR of more than 55% to Rs 41.17 crore between financial years 2024 to 2026. During the same period, the total income of the company increased by about 6% CAGR to Rs 1,216.74 crore.
However, the company also has debt. Hero Motors had a total debt of Rs 400.79 crore at the end of the March 2026 quarter. Its reserves and surplus were Rs 126.73 crore. A part of the proceeds from the IPO is to be used in debt reduction.
No significant movement in GMP, what should investors watch?
At present, there is not much enthusiasm in the gray market regarding Hero Motors IPO. However, GMP is not an official indicator and may change rapidly prior to listing.
Instead of taking decisions based only on gray market premium, investors should look at the company's earnings, debt, business growth, utilization of IPO proceeds and valuation. Especially in this IPO, there is an OFS of Rs 400 crore, while Rs 600 crore will come to the company from issuing new shares. Therefore it is important to understand both parts.
