Hero Motors Limited

Hero Motors Limited is one of India's leading automotive technology companies engaged in designing, developing, manufacturing, and supplying highly engineered powertrain solutions to global original equipment manufacturers (OEMs). The company operates across two primary business segments: Powertrain Solutions and Alloys and Metallics (A&M). The Powertrain Solutions segment is further divided into Gears & Transmissions (G&T)—serving two-wheelers, passenger cars, commercial vehicles, and aerospace/marine applications—and Bike Powertrain (BPT), which focuses on micro-mobility applications such as e-bikes and electric two-wheelers. Its core value proposition centers on offering end-to-end design, prototyping, validation, and high-volume manufacturing of complex transmission systems. The underlying business model relies on value-added engineering, long-term OEM program relationships, and first-mover proprietary technologies like Continuously Variable Transmission (CVT) hubs and integrated Electric Drive Units (EDUs).

The company's primary target customer base spans global premium automotive OEMs, motorsport organizers, e-bike manufacturers, and off-road mobility brands across the United States, Europe, India, and the ASEAN region. Key global clients include BMW, Ducati, Hero MotoCorp, enviolo, Formula Motorsport, HWA AG, and River Mobility. In Fiscal 2026, domestic sales within India accounted for 58.64% of revenue from operations (Rs 6,968.24 Million), while international markets/exports contributed 41.36% (Rs 4,915.27 Million), with Europe representing the largest overseas region at 33.59% (Rs 3,992.19 Million) followed by the United States at 3.86%. Customer concentration is high, with the top 10 customers generating 72.89% (Rs 8,661.40 Million) of total operational revenue in Fiscal 2026.

Manufacturing operations are conducted across six strategically located plants spread across India, the United Kingdom, and Thailand. In India, facilities are located at Gautam Buddha Nagar (Uttar Pradesh) for powertrain and sheet metal components; Mangli, Ludhiana (Punjab) for alloys and metallics; HYM Facility, Ludhiana (Punjab) for electric motors under a joint venture with Yamaha Motor Co., Japan; and SPUR Facility, Ludhiana (Punjab) for specialized bike/e-bike components. Internationally, the company operates a gearbox assembly plant in Samut Prakan (Thailand) to serve the ASEAN region and a high-performance transmission plant in Maidenhead (United Kingdom) following its acquisition of Hewland Engineering Limited. Additionally, the company is setting up two new production units in Ludhiana (Punjab) and Bengaluru (Karnataka).

According to the independent chartered engineer certification in the RHP, overall consolidated capacity utilization across all manufacturing facilities stood at 72.71% in Fiscal 2026 (71.96% in FY25 and 72.40% in FY24). Plant-specific capacity utilization for Fiscal 2026 was recorded as follows: Gautam Buddha Nagar Facility achieved 78.53% (Powertrain at 88.25% and Sheet Metal at 74.99%); Mangli Facility achieved 83.34% in Alloys & Metallics; SPUR Facility achieved 50.29% in Alloys & Metallics; United Kingdom Facility recorded 24.19% in Powertrain; HYM Facility recorded 14.56% in Powertrain; and Thailand Facility recorded 3.87% in Powertrain. The lower utilization at HYM and Thailand reflects recent commercial commissioning and initial production ramp-ups.

Operations and design capabilities are anchored by two dedicated technology centers located in Southam (United Kingdom) for automotive gears and transmissions design and Gautam Buddha Nagar (Uttar Pradesh, India) for micro-mobility e-drive systems. The company maintains significant in-house R&D capabilities, including transient dynamometer test rigs, software-based 100% product traceability (ODIN system), and advanced motor winding infrastructure. In Fiscal 2026, research and development expenditure totaled Rs 895.91 Million, representing 7.54% of operational revenue. Proprietary operational highlights include being the sole exporter of CVT hubs for e-bikes from India, perpetual manufacturing rights for enviolo CVP technology, and the launch of the 'ESYNC' integrated EDU portfolio.

Hero Motors Limited posted total income of ₹1,064.39 Cr (FY24), ₹1,089.59 Cr (FY25), and ₹1,188.35 Cr (FY26), with PAT of ₹17.04 Cr, ₹32.80 Cr, and ₹41.17 Cr respectively — a 2-year revenue CAGR of 5.66% and PAT CAGR of 55.46%. Total debt rose from ₹304.00 Cr (FY24) to ₹407.62 Cr (FY25) and stood at ₹400.79 Cr (FY26), with ₹190 Cr of fresh proceeds earmarked for debt prepayment. The issue is priced at a pre-issue P/BV of 6.60x (NAV ₹12.72 as on 31 March 2026; post-issue P/BV ≈ 3.53x). Attributing FY24–FY26 earnings to the expanded equity base implies P/Es of roughly 224x, 116x, and 93x — a steep premium to peers (Sona BLW 64.4x, UNO Minda 58.0x; peer average ~50x) despite a lower RoNW of 8.53%.

On BRLM's front, ICICI Securities Limited, DAM Capital Advisors Limited, and JM Financial Limited are associated with this IPO, and ICICI Securities Limited has handled 52 IPOs in the last three fiscal years. (as on 10.09.26)

• 1 Pankaj Munjal
• 2 Abhishek Munjal
• 3 Charu Munjal
• 4 O P Munjal Holdings