Hero Motors IPO

GMP History

Strengths

• ✓The company claims to be among India’s leading solutions providers to the global e-mobility industry, with e-mobility revenue of Rs 273.29 crore (23.00%) in FY26, Rs 175.59 crore (16.12%) in FY25 and Rs 128.08 crore (12.03%) in FY24. Its portfolio includes CVTs, EV transmissions, electric motors, and integrated drive units.
• ✓The company claims to have expanded its presence across the electric bike and premium two-wheeler segments, with customers including BMW and Ducati. It has supplied CVT systems for over 0.40 million e-bikes during FY24-FY26 and entered the Electric Drive Unit (EDU) segment under the ESYNC brand in 2023.
• ✓The company claims to have longstanding relationships with premium global and Indian OEMs across automotive and non-automotive sectors, including BMW, Ducati, Hero MotoCorp, Formula Motorsport, HWA Engineering, Escorts and Enviolo. It works closely with customers from the RfQ stage through product development and supply, focusing on quality, delivery and cost. The company claims that its customer relationships, switching costs and consistent performance create entry barriers and have contributed to customer recognition and awards.
• ✓The company has geographically diversified manufacturing and technology infrastructure across India, the United Kingdom and Thailand. Its facilities include precision manufacturing and gearbox assembly capabilities, while its Maidenhead facility provides design, prototyping and low-volume manufacturing. Revenue from international customers was Rs 491.53 crore (41.36%) in FY26, Rs 446.10 crore (40.94%) in FY25 and Rs 439.40 crore (41.28%) in FY24.
• ✓The company claims to have strengthened its R&D and engineering capabilities through technology centres, in-house testing equipment and strategic partnerships. R&D expenditure stood at Rs 89.59 crore (7.54% of revenue from operations) in FY26, Rs 77.27 crore (7.09%) in FY25 and Rs 79.31 crore (7.45%) in FY24. Its acquisition of a majority stake in Hewland and collaboration with Enviolo have further expanded its design, prototyping, and powertrain capabilities.
• ✓The company has seen a consistent increase in revenue from operations and PAT. Revenue from operations increased from Rs 1,064.39 crore in FY24 to Rs 1,089.59 crore in FY25 to Rs 1,188.35 crore in FY26. PAT increased from Rs 17.03 crore in FY24 to Rs 32.80 crore in FY25 to Rs 41.17 crore in FY26.

Risks

• !The company derives a significant portion of its revenue from operations outside India, particularly Europe. Revenue from India was Rs 696.82 crore (58.64%) in FY26, Rs 643.49 crore (59.06%) in FY25 and Rs 624.98 crore (58.72%) in FY24, while revenue from Europe was Rs 399.22 crore (33.59%), Rs 310.00 crore (28.45%) and Rs 312.17 crore (29.33%), respectively. Any adverse economic, regulatory or industry developments affecting these jurisdictions could hurt the company’s revenue from operations and financial performance.
• !The company’s business is dependent on the performance of e-bike, two-wheeler, motorsport and performance automotive industries in India and overseas markets. Revenue from e-bikes was Rs 153.57 crore (12.92%) in FY26, Rs 87.08 crore (7.99%) in FY25 and Rs 103.74 crore (9.75%); two-wheelers contributed Rs 487.16 crore (41.00%), Rs 461.80 crore (42.38%) and Rs 440.43 crore (41.37%), while motorsport and performance automotive contributed Rs 253.69 crore (21.35%), Rs 283.60 crore (26.03%) and Rs 292.90 crore (27.52%), respectively. Any decline in demand in these industry segments could adversely affect the company’s business, results of operations, cash flows and financial condition.
• !The company has 471 suppliers of raw materials as of FY26, compared with 464 as of FY25 and 431 as of FY24. The cost of raw materials consumed was Rs 653.50 crore (54.99% of revenue from operations and 56.64% of total expenses) in FY26, Rs 630.44 crore (57.86% and 58.80%) in FY25 and Rs 640.45 crore (60.17% and 60.47%) in FY24. The cost of raw materials sourced from the top 10 suppliers was Rs 240.53 crore (20.85% of total expenses) in FY26, Rs 233.93 crore (21.82%) in FY25 and Rs 227.89 crore (21.52%) in FY24. Further, the company does not have definitive supply agreements with all suppliers, with procurement generally undertaken through purchase orders. Any disruption or non-performance by key suppliers could adversely affect production, business operations, financial condition and cash flows.
• !The company derives a significant portion of its revenue from its top 10 customers. Revenue from the top 10 customers was Rs 866.14 crore (72.89% of revenue from operations) in FY26, Rs 850.20 crore (78.03%) in FY25 and Rs 819.19 crore (76.96%) in FY24. Any loss of, or significant reduction in sales to, these customers due to loss or non-renewal of contracts, disputes, adverse financial conditions or other factors could adversely affect the company’s business, financial condition, results of operations and cash flows.
• !The company has substantial capital expenditure and working capital requirements. Capital expenditure amounted to Rs 92.25 crore (9.58% of gross block) in FY26, Rs 152.40 crore (18.34%) in FY25 and Rs 132.84 crore (20.15%) in FY24. As of FY26, inventories stood at Rs 208.51 crore, trade receivables at Rs 252.90 crore and trade payables at Rs 140.35 crore, compared with Rs 191.26 crore, Rs 202.33 crore and Rs 137.21 crore, respectively, in FY25 and Rs 179.90 crore, Rs 194.79 crore and Rs 136.25 crore in FY24. Inventory days were 64, 64 and 62 days, trade receivable days were 78, 68 and 67 days, while trade payable days were 43, 46 and 47 days in FY26, FY25 and FY24, respectively. The company’s ability to raise funds for the above needs and to service borrowings in time is crucial for the smooth running of the business.
• !The company, its directors, promoters, and its subsidiaries are involved in certain tax, criminal, and statutory proceedings. Any adverse judgments in any of these cases could be detrimental to the company’s business prospects.
• !As of FY26, the company had outstanding financial indebtedness of Rs 543.33 crore. Any failure to service or repay these loans can harm the company’s operations and financial position.

About Hero Motors

Hero Motors is an automotive technology company engaged in designing, developing, manufacturing, and supplying powertrain solutions to automotive OEMs in the United States, Europe, India, and the ASEAN region. Its offerings cover design, prototyping, validation, development, and delivery of system-level and component-level solutions for electric and non-electric powertrains. The company’s products are used across two-wheelers, performance automotive, e-bikes, off-road vehicles, electric and hybrid cars, heavy-duty vehicles and eVTOL applications. Its key offerings include continuously variable transmissions (CVT), EV transmissions, electric motors, integrated drive units and gear sets. The company operates through two business segments: Powertrain Solutions and Alloys and Metallics (A&M). Powertrain Solutions comprises Gears and Transmissions (G&T) and Bike Powertrain (BPT), while A&M provides sheet metal and tubular assemblies and component solutions primarily to automotive OEMs. As of FY26, the company operated six manufacturing facilities across India, the United Kingdom and Thailand, along with two technology centres in the United Kingdom and India. It has in-house design, engineering, manufacturing, testing and validation capabilities and is also setting up additional facilities in Ludhiana, Punjab and Bengaluru, Karnataka.