Hero Motors Limited, a leading automotive powertrain technology provider, has filed its Draft Red Herring Prospectus (DRHP) for an initial public offering scheduled to open on 16 September 2026. The Ludhiana-based company, part of the HMC Group, specializes in designing and manufacturing powertrain solutions for global OEMs, with significant exposure to the electric mobility sector.

About the Company

Incorporated in 1998, Hero Motors Limited operates as a fully integrated powertrain systems provider. The company offers end-to-end solutions including design, prototyping, validation, and delivery of both system-level and component-level powertrain components for electric and non-electric vehicles. Its operations span two primary segments: Powertrain Solutions and Alloys and Metallics.

The company serves premium global OEMs, maintaining longstanding relationships with brands such as BMW and Ducati. Hero Motors operates six manufacturing facilities across India, the United Kingdom, and Thailand, supporting key markets in the United States, Europe, India, and the ASEAN region. In FY2026, two-wheelers contributed 41.00% of revenue, while e-bikes accounted for 12.92%.

Financial Performance

Hero Motors reported accelerating revenue growth in FY2026, driven by strong demand in its core segments. Revenue from operations rose by 9.06% year-on-year to ₹1,188.35 crore in FY2026, up from ₹1,089.59 crore in FY2025. Profitability also improved significantly, with Profit After Tax (PAT) increasing from ₹17.04 crore in FY2024 to ₹41.17 crore in FY2026.

Operating cash flow recovered strongly in FY2026 at ₹144.04 crore compared to ₹48.34 crore in FY2025. The company’s PAT margin expanded to 3.38% in FY2026 from 1.57% in FY2024.

Why the Company Is Raising Funds

The proceeds from the fresh issue are earmarked for three primary objectives:

• Debt Repayment: ₹190.00 crore allocated for repayment, prepayment, or redemption of outstanding borrowings to reduce debt servicing costs.
• Capacity Expansion: ₹200.00 crore designated for capital expenditure to expand capacity at the Gautam Buddha Nagar facility in Uttar Pradesh, specifically to increase contribution from systems and e-mobility products.
• General Corporate Purposes: Funding for inorganic growth through unidentified acquisitions and strategic initiatives, with the specific amount not specified in the DRHP.

Business Strengths

• E-Mobility Leadership: E-mobility revenue stood at ₹2,732.90 million, contributing 23.00% of total operations in FY2026, positioning the company as a key beneficiary of the global EV transition.
• Premium OEM Relationships: Longstanding partnerships with top global customers, including an exclusive supplier arrangement with BMW. The average tenure with the top five customers exceeds 12 years.
• Advanced Infrastructure: Six manufacturing facilities across India, the UK, and Thailand provide geographic diversification and cost competitiveness.
• Strong R&D Commitment: Research and development expenses were ₹895.91 million, representing 7.54% of revenue in FY2026, supported by technology centers in India and the UK.

Key Risks

• Customer Concentration: The top 10 customers contributed 72.89% of revenue in FY2026, with the single largest customer accounting for 35.57%. Loss of any major customer could materially impact financial performance.
• Geographic Concentration: Europe accounts for 33.59% of revenue, exposing the company to economic slowdowns, regulatory changes, or geopolitical events in the region.
• Debt Levels: The company reported a debt-to-equity ratio of 0.83 in FY2026, with outstanding long-term debt of ₹987.69 million and short-term debt of ₹3,020.20 million.
• Foreign Exchange Exposure: Unhedged foreign currency exposure was ₹1,029.65 million (8.66% of revenue) in FY2026, subjecting results to exchange rate fluctuations.

Important IPO Dates

• IPO Opening Date: 16-Sep-2026
• IPO Closing Date: 18-Sep-2026
• Allotment Date: Not Available
• Listing Date: Not Available

Offer Details

The offer structure includes a fresh issue component with no Offer for Sale (OFS) disclosed. Specific details regarding the price band, face value, lot size, and reservation categories for QIB, NII, and Retail investors are not available in the current filing.

Bottom Line

Hero Motors presents itself as a strategic play on the global shift toward electric mobility, backed by strong relationships with premium OEMs and improving profitability. With FY2026 PAT reaching ₹41.17 crore, the IPO aims to deleverage the balance sheet and expand e-mobility manufacturing capacity. However, high customer concentration and significant debt levels remain key considerations.