Hero Motors
FinMinutes Deep Business Model & Edge
Hero Motors Limited is an India-based automotive technology company engaged in designing, manufacturing, and supplying engineered powertrain solutions and alloys and metallics components. The company caters to global OEMs across electric bikes, motorcycles, performance automotive, and specialty vehicle sectors in India, Europe, the United States, and ASEAN regions.
What this company actually does — full breakdown ▾
Hero Motors Limited is a global automotive technology company specializing in engineered powertrain solutions and alloy and metallic components. Its product portfolio comprises Powertrain Solutions—including Gears & Transmissions (G&T) and Bike Powertrains (BPT) such as continuously variable transmission (CVT) hubs, electric motors, and drive units for e-bikes—and Alloys & Metallics (A&M) providing sheet metal and tubular assemblies. The company serves automotive OEMs, e-bike manufacturers, and motorsport participants across two-wheelers, passenger cars, off-road vehicles, and aerospace. Key customers include BMW, Ducati, Hero MotoCorp, enviolo, and River Mobility, with the top 10 customers contributing 72.89% of FY26 revenue. Geographically, Hero Motors serves clients across 23 countries, generating 58.64% of FY26 revenue from India (₹ 696.82 crore) and 41.36% from international markets (₹ 491.53 crore), led by Europe at 33.59%. Its operational footprint encompasses six manufacturing and assembly facilities across India (Gautam Buddha Nagar and Ludhiana), Thailand (Samut Prakan), and the United Kingdom (Maidenhead and Southam). Supply chain procurement relies primarily on domestic vendors, who supplied 93.92% of raw materials in FY26. On a consolidated scale, the company generated ₹ 1,188.35 crore in FY26 revenue from operations.
- Powertrain Solutions — Encompasses Gears & Transmission (G&T) for automotive/off-road applications and Bike Powertrain (BPT) for e-bikes and micro-mobility.
- Alloys and Metallics (A&M) — Provides sheet metal and tubular assemblies and component solutions primarily to automotive OEMs.
First-mover advantage as the sole Indian manufacturer exporting CVT hubs and integrated electric powertrain products for e-bikes globally, proprietary JV technology partnerships with Yamaha (HYM) and Hewland Engineering, long-term OEM relationships, and geographically diversified manufacturing footprint across India, UK, and Thailand.
The Offer
Follow the Money — Use of Proceeds
- Repayment/prepayment/redemption, in full or in part, of certain outstanding borrowings availed by our Company — ₹190.00 cr
- Capital expenditure of our Company through purchase of equipment required for expansion in capacity of our Gautam Buddha Nagar, Uttar Pradesh facility — ₹200.00 cr
- Funding inorganic growth through unidentified acquisitions and other strategic initiatives and general corporate purposes
Valuation at the Offer Price
The filing does not print a single headline multiple, so this one is ours: the upper band divided by the latest restated earnings per share — the same arithmetic the “Basis for the Offer Price” section performs. It is struck on pre-issue earnings; where the issue creates new shares, the post-issue multiple is computed in the workings below. The peer group is the one the filing itself names. A premium is not the same thing as expensive and a discount is not the same thing as cheap — the peer table and the reasons sit further down this page.
FinMinutes IPO Score — How It's Built
Transparent, deterministic, computed from the filing — not an opinion. Open any component below to see exactly what it measures and what it is worth. Components with no disclosed input are dropped from the weighting entirely rather than held at an invented neutral, because a constant inside a weighted average is not neutral — it quietly drags every score toward the middle. Weighted across 5 live components.
100% of the designed weighting had real data behind it on this issue. A lower coverage figure does not mean a worse company — it means we are standing behind less of the picture, and you should read the findings below rather than the headline number.
How this is measured12%
Whether fresh capital actually enters the business. A predominantly offer-for-sale issue is marked down ONLY when the financials are weak. A profitable, cash-rich company selling down is treated as neutral, not penalised, because it does not need the money.
How this is measured12%
What changed between the draft prospectus and the final one. A period roll-forward or a refreshed industry report is expected and scores neutral. A statutory auditor replaced mid-process, a prior year restated, an offer-for-sale expanded late, new statutory dues disclosed, or a risk factor quietly removed all score against. Where only one of the two documents has been read, this component is dropped from the weighting rather than guessed.
How this is measured32%
Driven by the models battery run on the filing's own restated numbers: the Piotroski fundamental tests (scored out of those we could actually run), the Altman Z-double-prime solvency zone, and the direction of profit across the disclosed period. It is not a single yes/no on last year's profit.
How this is measured10%
The post-issue earnings multiple against the peer median disclosed in the filing. A discount to the median scores well and a premium scores badly. When the filing does not disclose comparable peer multiples, this component is dropped from the weighting rather than held at a made-up neutral.
How this is measured28%
Starts at 100 and loses points for every material finding: 12 for a flagged finding, 4 for a noted one. Two kinds feed it. DERIVED findings are computed from the filed numbers against stated thresholds — operating cash negative while profit is positive, related-party revenue above 15% of total, revenue rising while profit falls, goodwill above 30% of net worth, receivables growing more than 1.3x faster than sales, cash below half of short-term debt. Those are reproducible: the same filing gives the same answer every time, and the rule is printed beside the finding. READ findings come from the forensic sweep of the notes. Contingent liabilities, related-party intensity, customer concentration, litigation, auditor qualifications, statutory dues, promoter funding. Findings that record the ABSENCE of a problem — no litigation pending, an unmodified audit opinion — deduct nothing. This is the component our forensic read drives directly, and it moves most between companies.
3-Year Financial & Growth Trend
| Metric | FY26 | FY25 | FY24 |
|---|---|---|---|
| Revenue (₹ Cr) | 1188.35 | 1089.59 | 1064.39 |
| Net Profit (₹ Cr) | 41.17 | 32.8 | 17.04 |
| PAT Margin | 3.46% | 3.01% | 1.6% |
Revenue Breakdown
- Alloys and Metallics (A&M): 46.33%
- Gears and Transmission (G&T): 41.14%
- Bike Powertrain (BPT): 12.53%
Market Context
NOT part of the FinMinutes ScoreThe Score above is what the filing says. Everything in this box is what the crowd says. We keep them apart on purpose — every other site blends the two and calls the result a rating. Demand is real information, but it is information about the market, not about the company, and it changes by the hour while the company does not.
Demand and our read of the filing are broadly in the same territory.
Subscription is low early in a book and high at the end, because most bids arrive in the final hours. A number read on day one says more about the clock than the company — which is precisely why it is not in the Score. GMP is unofficial, unregulated, and easily moved. Neither is a recommendation.
Why the numbers moved, in management’s own words
Taken from the Management’s Discussion and Analysis section of the filing. A number tells you what happened; this is the company’s explanation of why, and whether it calls the cause temporary or structural.
| Metric | Move | Management's stated reason | Type |
|---|---|---|---|
| Revenue from Operations (FY26 vs FY25) | ↑ 9.1% | Revenue from operations grew due to an increase in offtake from key domestic and international OEM customers across powertrain and alloys segments. | Structural |
| Other Income (FY26 vs FY25) | ↑ 31.2% | Other income increased primarily due to higher net foreign exchange fluctuation gains driven by international revenue growth and currency movements. | Cyclical |
| Depreciation and Amortisation Expense (FY26 vs FY25) | ↑ 21.1% | Depreciation increased due to capital expenditure additions in plant, machinery, equipment, and Right-of-Use assets across manufacturing facilities. | Structural |
| Profit After Tax (FY26 vs FY25) | ↑ 25.5% | Net profit expanded due to higher revenue scale, gross margin improvement, and increased foreign exchange gains. | Structural |
| Operating Cash Flow (FY26 vs FY25) | ↑ 198.0% | Operating cash flows increased due to higher profit before tax and working capital inflows from increased trade payables and other financial liabilities. | Structural |
| Trade Receivables (FY26 vs FY25) | ↑ 25.0% | Trade receivables increased in line with overall revenue growth and credit cycles associated with international OEM shipments. | Structural |
| Purchases of Stock-in-Trade (FY26 vs FY25) | ↑ 261.9% | Purchases of stock-in-trade increased to support component trading and assembly requirements across subsidiaries. | Structural |
| Revenue from Operations (FY25 vs FY24) | ↑ 2.4% | Revenue grew modestly due to higher component orders from an international customer in Powertrain and a domestic customer in Alloys & Metallics. | Structural |
| Depreciation and Amortisation Expense (FY25 vs FY24) | ↑ 32.9% | Depreciation rose due to asset additions in property, plant and equipment alongside leasehold land Right-of-Use asset creation. | Structural |
| Profit After Tax (FY25 vs FY24) | ↑ 92.5% | Profitability improved significantly due to top-line growth, gross margin expansion, and a reduction in non-cash share-based payment expenses. | Structural |
| Operating Cash Flow (FY25 vs FY24) | ↓ 63.4% | Operating cash flows declined due to working capital absorption from inventory build-up and changes in current financial liabilities. | Cyclical |
| Total Borrowings (FY25 vs FY24) | ↑ 34.1% | Borrowings increased to fund capital expenditure at manufacturing plants and meet incremental working capital requirements. | Structural |
Headwinds
- Customer Concentration company persistent
Deriving 72.89% of FY26 revenue from top 10 customers exposes operations to risks of order reductions or loss of key OEM contracts. - End-Industry Fluctuations in E-Bikes and Two-Wheelers sector persistent
Demand is dependent on production cycles and consumer adoption in the global e-bike and premium two-wheeler sectors. - Low Capacity Utilization at International and JV Plants company temporary
Facilities such as Thailand (3.87%), HYM (14.56%), and UK (24.19%) operate below optimal capacity during initial production ramp-up phases. - Raw Material and Freight Price Volatility macro persistent
Fluctuations in raw material input prices (steel, aluminum) and global logistics costs impact manufacturing margins.
Tailwinds
- Global Electrification and E-Mobility Transition sector
Accelerated adoption of e-bikes, electric two-wheelers, and electric drive units expands the addressable market for powertrain components. - Premiumization in Global Two-Wheeler Market sector
Growing rider preference for higher cc and high-performance motorcycles increases demand for specialized gear and transmission solutions. - Supply Chain Localization and OEM Outsourcing macro
Global OEMs are increasingly outsourcing precision gear and powertrain manufacturing to specialized, cost-competitive Indian suppliers.
| Facility | Period | Utilisation |
|---|---|---|
| Gautam Buddha Nagar Facility (Powertrain) | FY26 | 88.3% |
| Gautam Buddha Nagar Facility (Sheet Metal) | FY26 | 75.0% |
| Mangli Facility (Alloy & Metal) | FY26 | 83.3% |
| HYM Facility (Powertrain / Electric Motors) | FY26 | 14.6% |
| Spur Facility (Alloy & Metal) | FY26 | 50.3% |
| UK Facility (Powertrain) | FY26 | 24.2% |
| Thailand Facility (Powertrain) | FY26 | 3.9% |
Issue Timeline
Dates as carried by the exchange feed. Allotment, refund and credit dates move more often than the open and close dates do.
- Refunds initiated2026-09-22
- Pre Application Start2026-09-15
- Bidding Start2026-09-16
- Bidding End2026-09-18
- Allotment Process Start2026-09-21
- Allotment Finalization2026-09-22
- Listing Day2026-09-23
- Mandate End2026-10-30
Applying, and Who Handles the Allotment
Check allotment status on the registrar’s own portal → We link the registrar directly rather than mirroring the form.
Deep Financials
Revenue, EBITDA and profit are what every listing site prints. Below are the full restated statements as disclosed, the ratios we compute from them, and a DuPont decomposition of the return on equity. A prospectus carries three years, not ten — that is the document’s ceiling, and within it we go as deep as it allows.
Income StatementThe profit and loss as filed, then what we derive from it — kept apart.
Statutory order, exactly as restated in the filing. Finance cost and depreciation sit inside Total Expenses under Ind AS, which is why they are listed among the expense lines here rather than below the total. The expense rows sum to the total. Rows the filing does not disclose separately are omitted rather than left blank.
| Income Statement — as filed (₹ Cr) | FY26 | FY25 | FY24 |
|---|---|---|---|
| Revenue from Operations | 1,188.35 | 1,089.59 | 1,064.39 |
| Other Income | 28.39 | 21.64 | 19.03 |
| Total Income | 1,216.74 | 1,111.23 | 1,083.42 |
| Cost of Materials Consumed | 653.50 | 630.44 | 640.45 |
| Purchases of Stock-in-Trade | 27.71 | 7.66 | 0.00 |
| Changes in Inventories | 11.67 | -0.67 | 4.57 |
| Employee Benefit Expense | 164.51 | 171.14 | 177.37 |
| Finance Cost | 40.84 | 36.98 | 33.41 |
| Depreciation & Amortisation | 45.94 | 37.94 | 28.55 |
| Other Expenses | 209.61 | 188.66 | 174.76 |
| Total Expenses | 1,153.78 | 1,072.16 | 1,059.11 |
| Profit Before Exceptional Items and Tax | 62.96 | 39.08 | 24.31 |
| Exceptional Items | -1.96 | — | — |
| Profit Before Tax | 61.00 | 39.08 | 24.31 |
| Tax Expense | 19.84 | 6.28 | 7.28 |
| Profit After Tax | 41.17 | 32.80 | 17.04 |
| Other Comprehensive Income | 7.22 | 9.51 | -9.35 |
| Total Comprehensive Income | 48.38 | 42.31 | 7.68 |
| EPS - Basic | 1.15 | 0.67 | 0.36 |
| EPS - Diluted | 1.14 | 0.66 | 0.35 |
Balance SheetWhat the company owns, owes, and is worth on paper.
| Balance Sheet (₹ Cr) | FY26 | FY25 | FY24 |
|---|---|---|---|
| Share Capital | 358.34 | 357.38 | 353.58 |
| Reserves & Surplus | 116.32 | 67.71 | 32.26 |
| Net Worth | 474.66 | 425.09 | 385.84 |
| Long-term Borrowings | 98.77 | 123.37 | 81.75 |
| Short-term Borrowings | 302.02 | 284.25 | 222.25 |
| Total Borrowings | 400.79 | 407.62 | 304.00 |
| Trade Payables | 140.35 | 137.21 | 136.25 |
| Current Liabilities | 644.52 | 515.48 | 491.00 |
| Total Liabilities | 890.82 | 738.61 | 685.04 |
| Property, Plant & Equipment | 527.31 | 495.37 | 360.31 |
| Capital Work in Progress | 66.65 | 38.10 | 59.60 |
| Intangible Assets | 26.07 | 14.53 | 5.25 |
| Investments | 3.00 | 3.00 | 1.56 |
| Inventories | 208.51 | 191.26 | 179.90 |
| Trade Receivables | 252.90 | 202.33 | 194.79 |
| Cash & Equivalents | 22.39 | 9.45 | 42.26 |
| Current Assets | 605.90 | 515.54 | 536.10 |
| Total Assets | 1,371.83 | 1,164.62 | 1,059.86 |
Cash FlowWhere the cash actually went. Often the most honest statement of the three.
| Cash Flow (₹ Cr) | FY26 | FY25 | FY24 |
|---|---|---|---|
| Net Cash from Operating Activities | 144.04 | 48.34 | 131.97 |
| Capital Expenditure | 92.25 | 152.40 | 132.84 |
| Net Cash from Investing Activities | -69.39 | -135.23 | -76.93 |
| Net Cash from Financing Activities | -61.80 | 53.69 | -20.36 |
| Net Change in Cash | 12.86 | -33.20 | 34.68 |
Ratio AnalysisProfitability, leverage, liquidity, efficiency and earnings quality — computed by us.
Every ratio below is computed by us from the line items the company disclosed — not copied from anywhere. The arithmetic is standard; the point is that somebody actually did it. Blank cells mean the filing did not disclose the inputs, and we would rather show a gap than invent a number.
| Ratio | FY26 | FY25 | FY24 |
|---|---|---|---|
| Profitability | |||
| EBITDA Margin (%) | 12.3 | 10.3 | 8 |
| EBIT Margin (%) | 8.5 | 6.8 | 5.3 |
| PAT Margin (%) | 3.5 | 3 | 1.6 |
| Return on Equity (%) | 8.7 | 7.7 | 4.4 |
| Return on Capital Employed (%) | 11.9 | 9.1 | 8.4 |
| Return on Assets (%) | 3 | 2.8 | 1.6 |
| Leverage | |||
| Debt / Equity (x) | 0.84 | 0.96 | 0.79 |
| Net Debt / EBITDA (x) | 2.53 | 3.49 | 3.03 |
| Interest Coverage (x) | 2.54 | 2.06 | 1.73 |
| Liquidity | |||
| Current Ratio (x) | 0.94 | 1 | 1.09 |
| Quick Ratio (x) | 0.62 | 0.63 | 0.73 |
| Efficiency | |||
| Asset Turnover (x) | 0.87 | 0.94 | 1 |
| Receivable Days | 78 | 68 | 67 |
| Inventory Days | 64 | 64 | 62 |
| Payable Days | 43 | 46 | 47 |
| Cash Conversion Cycle (days) | 99 | 86 | 82 |
| Quality of Earnings | |||
| Operating Cash Flow / PAT (x) | 3.5 | 1.47 | 7.74 |
| Accruals Ratio (%) | -7.5 | -1.3 | -10.8 |
| Capex / Depreciation (x) | 2.01 | 4.02 | 4.65 |
DuPont DecompositionWhy the return on equity is what it is: margin, efficiency, or leverage.
A headline return on equity tells you what. The DuPont decomposition tells you why — whether the return is earned through margin, through asset efficiency, or simply through leverage. Two companies can post an identical ROE for opposite reasons, and only one of them is safe.
| Component | FY26 | FY25 | FY24 |
|---|---|---|---|
| Net Margin (PAT / Revenue) | 3.5% | 3% | 1.6% |
| Asset Turnover (Revenue / Assets) | 0.87x | 0.94x | 1x |
| Equity Multiplier (Assets / Net Worth) | 2.89x | 2.74x | 2.75x |
| = Return on Equity | 8.7% | 7.7% | 4.4% |
| Tax Burden (PAT / PBT) | 0.67x | 0.84x | 0.7x |
| Interest Burden (PBT / EBIT) | 0.59x | 0.51x | 0.42x |
| Operating Margin (EBIT / Revenue) | 8.7% | 7% | 5.4% |
Computed from the disclosed statements. Where the filing omits an input, the row is left blank rather than estimated.
Quality of EarningsWhat the statements say when you read them against each other.
What the statements say once you read them against each other. These are observations, not verdicts — every one is arithmetic on the numbers the company itself disclosed, and each is stated so you can go and check it in the filing.
- Operating cash flow was 3.5x reported profit in FY26. Earnings are converting into cash, which is what you want to see and frequently is not the case.
- Between FY24 and FY26 revenue grew 12% while profit grew 142%. Profit expanding at several times the rate of revenue is not automatically a concern — operating leverage does exactly this — but it is worth confirming from the filing whether the gap comes from genuine margin expansion or from one-off items.
- The current ratio was 0.94x in FY26 — current liabilities exceeded current assets. The company depends on continued access to short-term funding.
Forensic ModelsBeneish, Altman and Piotroski — plus our own final-year check.
Beneish M-Score
M = -2.52An eight-variable model built to detect earnings manipulation, and built to run on exactly two consecutive years — which is what a prospectus gives us. It belongs here more than anywhere: a company about to list has the maximum possible incentive to have dressed up the very years it is about to show you. A score above −1.78 is the threshold at which the model says the accounts merit a closer look. It is a screening signal, not an accusation, and it was calibrated on listed companies elsewhere. Read the eight components, not just the total.
| Component | Value | What it captures |
|---|---|---|
| DSRI Days Sales in Receivables Index (Receivables_t / Sales_t) / (Receivables_t-1 / Sales_t-1) | 1.146 | Above 1 means receivables grew faster than sales. Revenue may be being recognised ahead of collection. |
| GMI Gross Margin Index GrossMargin_t-1 / GrossMargin_t | 0.936 | Above 1 means margins deteriorated. A firm with worsening prospects has more incentive to manipulate. |
| AQI Asset Quality Index AQ_t / AQ_t-1, where AQ = 1 - (CurrentAssets + PPE) / TotalAssets | 1.318 | Above 1 means a rising share of assets is soft (neither current nor fixed) — capitalised costs can hide here. |
| SGI Sales Growth Index Sales_t / Sales_t-1 | 1.091 | Growth is not manipulation. But high-growth firms face more pressure to keep the streak going. |
| DEPI Depreciation Index DepRate_t-1 / DepRate_t, where DepRate = Dep / (Dep + PPE) | 0.888 | Above 1 means assets are being depreciated more slowly — a quiet way to lift reported profit. |
| SGAI SG&A Index (SGA_t / Sales_t) / (SGA_t-1 / Sales_t-1), SGA proxied as employee cost + other expenses | 0.953 | A proxy, because filings rarely break out SG&A cleanly. Read it as a direction, not a precise figure. |
| LVGI Leverage Index Leverage_t / Leverage_t-1, where Leverage = (CurrentLiab + LongTermDebt) / TotalAssets | 0.988 | Above 1 means leverage rose. Debt covenants create pressure to hit numbers. |
| TATA Total Accruals to Total Assets (PAT - CashFromOperations) / TotalAssets | -0.075 | The gap between reported profit and cash generated. The single heaviest term in the model — and the one that catches profit that never became cash. |
M = -2.52, below the −1.78 threshold. The model does not flag these accounts.
Altman Z″-Score (emerging markets)
Z″ = 4.41 · SafeA distress-prediction model. We use the Z″ variant deliberately: the original Z was calibrated on American manufacturers and misleads badly on Indian services companies. Above 2.6 is the safe zone, 1.1 to 2.6 is grey, below 1.1 is the distress zone. Like every model of its kind it is a screen, not a prophecy.
| X1 — Working Capital / Total Assets | -0.028 |
| X2 — Retained Earnings / Total Assets | 0.085 |
| X3 — EBIT / Total Assets | 0.076 |
| X4 — Net Worth / Total Liabilities | 0.533 |
| Z″ = 3.25 + 6.56·X1 + 3.26·X2 + 6.72·X3 + 1.05·X4 | 4.41 |
Piotroski F-Score (adapted)
6 / 8Nine yes-or-no tests of fundamental strength — except we run eight. One of the original nine asks whether the company issued new shares, which is plainly absurd to ask of a company whose entire purpose at this moment is to issue shares. We drop that test, and we would rather tell you that than quietly fudge it.
- ✓Positive return on assets
- ✓Positive operating cash flow
- ✓Return on assets improving
- ✓Cash flow exceeds profit (quality of earnings)
- ✓Long-term leverage decreasing
- ✗Current ratio improving
- ✓Gross margin improving
- ✗Asset turnover improving
Ratios Nobody Prints
- Contingent liabilities / Net worth: 0.7%
Contingent liabilities of 3.49 cr against a net worth of 474.66 cr — 0.7% of what the company is worth on paper. These are obligations that sit off the balance sheet but could land on it. What they consist of matters as much as the size: a corporate guarantee to a subsidiary is a different animal from a disputed tax demand, and the filing says which. - Related-party revenue / Total revenue: 4%
4% of revenue in FY26 came from entities connected to the promoters. Revenue you sell to yourself is not the same as revenue you won in the market. - Cash / Short-term borrowings: 0.07x
Short-term borrowings of 302.02 cr against cash of 22.39 cr. Debt that must be refinanced within a year is only comfortable while lenders stay comfortable. - Promoter remuneration / PAT: 19.8%
Managerial remuneration to the promoter group was 8.15 cr against a profit of 41.17 cr. This is a legitimate cost — but it is also a route by which value leaves a company before it ever reaches a minority shareholder.
The Formula NotebookEvery number above, with the working shown. Check us.
Every number we publish, with the working shown. The formula, the same formula with this company’s actual figures put into it, the answer, and what it is for. Check us. That is the point.
PAT ÷ Net Worth41.17 ÷ 474.66What the company earned on the money shareholders have in it. The headline measure of return — and the one the DuPont section takes apart.
EBIT ÷ (Net Worth + Total Borrowings)103.80 ÷ (474.66 + 400.79) = 103.80 ÷ 875.45Return on ALL the capital in the business, borrowed as well as owned. Unlike ROE, it cannot be flattered by taking on debt.
EBITDA ÷ Revenue149.74 ÷ 1,188.35Operating profitability before the effects of debt, tax and depreciation. What the business earns from the act of trading.
Total Borrowings ÷ Net Worth400.79 ÷ 474.66How much the company has borrowed against what it owns. High is not automatically bad — ask whether the borrowing is being serviced comfortably.
EBIT ÷ Finance Cost103.80 ÷ 40.84How many times over operating profit covers the interest bill. Below about 2x, a meaningful share of what the business earns is going to lenders rather than owners.
(Trade Receivables ÷ Revenue) × 365(252.90 ÷ 1,188.35) × 365How long the company waits to be paid. Rising receivable days mean revenue is being booked faster than it is collected — which is where a great many accounting problems begin.
Inventory Days + Receivable Days − Payable Days64 + 78 − 43How long cash is tied up in the operating cycle before it comes back. The longer it is, the more working capital the business must fund.
Cash from Operations ÷ PAT144.04 ÷ 41.17Did the profit turn into cash? Profit is an opinion; cash is a fact. When this sits well below 1x for long, the two are drifting apart, and the filing is where you find out why.
(PAT − Cash from Operations) ÷ Total Assets(41.17 − 144.04) ÷ 1,371.83 = -102.87 ÷ 1,371.83The share of reported profit that exists on paper rather than in the bank. It is also the heaviest single term in the Beneish model, for good reason.
Price × Post-issue Shares₹84.00 × 361,140,351 sharesWhat the whole company is being valued at, if the issue prices at the top of the band.
Market Cap + Total Borrowings − Cash3,033.58 + 400.79 − 22.39What it would actually cost to buy the whole business: you take on its debt and you get its cash. This is the number a buyer cares about, and it is the reason a P/E on its own can mislead.
Enterprise Value ÷ EBITDA3,411.98 ÷ 149.74The multiple that includes debt. Two companies on the same P/E — one debt-free, one heavily borrowed — are not the same investment, and only this number tells you so.
Market Cap ÷ PAT3,033.58 ÷ 41.17The familiar multiple. Useful, but blind to debt — read it alongside EV/EBITDA, never instead of it.
Market Cap ÷ (PAT − exceptional items, tax-effected)3,033.58 ÷ (41.17 − -1.96 at 32.5% tax)The latest year carries an exceptional item of ₹-1.96 cr, which depressed reported profit. Both multiples are shown because both are true: one is what the year printed, the other is what the business did. Which one belongs in your judgement is your call, not ours.
Growth needed to reach the peer multiple on earnings alone73.68x against a peer median of 56.15xThis is not a forecast and not a target. It is the price restated as a question: at this multiple, with the price unchanged, earnings would have to compound at this rate to arrive at what the filing’s own peer group trades on. Whether the business can do that is the argument — we are only stating what the argument is about.
EBIT × (1 − tax rate) ÷ (Net Worth + Debt − Cash)NOPAT ÷ Invested CapitalWhat the business earns on the capital actually at work in it. We do not compare this to a cost of capital: that would need a beta, an unlisted company has none, and inventing one would be theatre.
P/E ÷ trailing PAT growth (%)73.68 ÷ 25.5%PEG was designed for FORWARD growth. This one uses TRAILING growth, because that is all a prospectus gives us — and the final year before an IPO is very often the best year the company will have for a while. A low PEG here may say more about the timing of the filing than about the price. We show it because it was asked for; we show the growth denominator beside it so it cannot mislead you quietly.
Workspace
The post-issue share count is stated as “[•]” in this filing until final pricing, so we derive it: profit after tax divided by earnings per share gives the pre-issue count, and the fresh issue divided by the offer price gives the new shares. Everything below rests on that derivation. It is close, not exact.
The numbers are already loaded. Move the offer price and watch every multiple move with it. Set your own growth and margin and see what they imply two years out. These are your assumptions, not our forecast — we have no view on what this company will earn, and the moment we published one we would be doing something we are not registered to do. What we can do is put the arithmetic in front of you and get out of the way.
Price defaults to the top of the band. Margin defaults to what the company actually reported in FY26.
Projections are arithmetic on the inputs you typed. They are not a forecast, not a recommendation, and not a view on whether this offer is worth taking. Educational only.
Institutional Alpha: DRHP Deep Dive
The global market for gears and transmissions is projected to expand from ₹ 340,000-350,000 crore in 2025 to ₹ 485,000-495,000 crore by 2031 at a CAGR of 6% to 8%, driven by vehicle electrification, premiumization in two-wheelers, and demand for high-performance powertrains. Concurrently, the global e-bike market is forecasted to grow from 8.24 million units in 2024 to 12.5-14.5 million units by 2031 at a 6% to 9% CAGR, boosting addressable demand for bike powertrain solutions to ₹ 88,000-92,200 crore by 2031. Hero Motors Limited is strategically positioned as a leading Indian powertrain solutions provider, leveraging its precision manufacturing, EV-neutral portfolio, and global OEM partnerships across India, Europe, and ASEAN.
Electric Powertrain Pivot & Sub-scale Overseas Capacity
Hero Motors has built a specialized position in e-bike CVT hubs and electric drive units through acquisitions (Hewland, Spur) and JVs (HYM with Yamaha). However, overseas and JV facilities in Thailand, UK, and HYM operate at low capacity utilization (3.87% to 24.19%), driving drag on consolidated net margins until volume offtake ramps up.
Source: p.54, p.265, p.537De-leveraging Capital Structure via IPO Proceeds
With total consolidated borrowings at ₹ 400.79 crore as of FY26, the allocation of ₹ 190.00 crore from Fresh Issue proceeds to debt prepayment will reduce finance costs (₹ 40.84 crore in FY26) and improve debt-to-equity ratios from 0.83x.
Source: p.114, p.300, p.544Promoter Group Synergies & Inter-Company Real Estate Transactions
Operations are closely linked with the broader HMC Group, with Hero Cycles Limited providing sub-contracting job work (₹ 22.34 crore in FY26) and leasing/selling land (₹ 20.54 crore Mangli land purchase). Binding 2022 scheme demergers formally carved out the auto business into Hero Motors.
Source: p.98, p.305, p.416Shareholding, Syndicate & Leadership
Leadership & Skin in the Game
Leadership: Amit Gupta
Litigation: 1 criminal complaint by UPPCB against Pankaj Munjal; 2 material civil litigations against Pankaj Munjal regarding trademark and family settlement disputes; 1 MCGM notice involving Charu Munjal; Personal guarantees provided by Pankaj Munjal for subsidiary facilities.
Auditor / RPT Flags: None; unmodified audit opinion on Restated Consolidated Financial Information.
Peers & Valuation
| Company | P/E | P/B | RoE | Margin |
|---|---|---|---|---|
| CIE Automotive India Limited | 17.68 | — | 13.18 | — |
| Endurance Technologies Limited | 40.84 | — | 15.29 | — |
| Sona BLW Precision Forgings Limited | 76.5 | — | 10.77 | — |
| UNO Minda Limited | 59.84 | — | 19.59 | — |
| Varroc Engineering Limited | 56.15 | — | 18.7 | — |
At the ₹84 upper band, the issue is priced at 73.7x earnings — a 31% premium to the peer median of 56.2x. This is the arithmetic of the price band against the peers the filing itself lists; it is not a view on whether the offer is worth taking.
Plant Vitals
The operating metrics that actually price this business — the ones a generic IPO page skips. Straight from the filing.
| Metric | Value | Detail |
|---|---|---|
| Installed capacity | 6 facilities | 6 manufacturing & assembly plants across India (3), UK (2), and Thailand (1) |
| Capacity utilisation | 88.25% | Gautam Buddha Nagar Powertrain facility in FY26 (overseas/JV plants range from 3.87% to 24.19%) |
| Order book / program pipeline | ₹1,960.00 crore | Confirmed OEM program awards commencing between 2025 and 2027 |
| Customer concentration | 72.89% | Top 10 customers share of FY26 revenue from operations (Top 5 account for 57.82%) |
| Value addition / Gross margin | 41.69% | FY26 gross margin reflecting precision manufacturing value-add over raw material pass-through |
Source: p.54, p.55, p.196, p.272 — Business / MD&A
🔍 Forensic Findings — What the Footnotes Say
Findings from across the filing — the notes, MD&A, related-party disclosures, contingent liabilities, CARO and litigation, alongside the risk section itself. Each carries where it was found, so you can see which were buried and which were disclosed. Findings marked derived are computed from the filed numbers against a stated rule, shown beside them.
Subsidiary HYM Drive Systems Private Limited (90% held by Company, 10% by Yamaha Motor Co.) triggered withdrawal provisions under its Shareholders' Agreement as accumulated losses exceeded two-thirds of net worth and the entity incurred losses for three consecutive financial years. Shareholders have provided letters confirming continued financial support for at least 12 months.
p.293Key operational subsidiaries reported net losses in FY26, including Hero Thai (loss of ₹ 6.67 crore), HYM Drive Systems (loss of ₹ 4.91 crore), Hero EDU (loss of ₹ 4.74 crore), Hewland Engineering (loss of ₹ 3.74 crore), and Spur Technologies (loss of ₹ 1.69 crore).
p.49, p.537Promoter Group entity Nipman Fastener Industries Private Limited is currently under Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016.
p.69, p.338The Offer of ₹ 1,000.00 crore comprises a Fresh Issue of ₹ 600.00 crore and an Offer for Sale of ₹ 400.00 crore. Fresh Issue proceeds are allocated ₹ 190.00 crore for debt repayment and ₹ 200.00 crore for Gautam Buddha Nagar facility expansion.
p.1, p.114The Company uses the 'Hero' brand name pursuant to a 2010 agreement requiring 26% promoter shareholding. Trademark applications for 'Hero Motors' wordmark and logo have been objected to, and civil litigations are pending among Munjal family members regarding trademark rights.
p.26, p.37, p.4831 criminal complaint by UPPCB against Pankaj Munjal; 2 material civil litigations against Pankaj Munjal regarding trademark and family settlement disputes; 1 MCGM notice involving Charu Munjal; Personal guarantees provided by Pankaj Munjal for subsidiary facilities.
p.2, p.105, p.315, p.480Short-term borrowings of ₹302.02 cr against cash of ₹22.39 cr. Debt that must be refinanced within a year is comfortable only while lenders stay comfortable.
rule: cash < 0.5x short-term debtCompany's Claims vs Reality
We stress-test each claim against the filing's own data.
CRISIL Report confirms Hero Motors is a leading powertrain solution provider to e-mobility, generating ₹ 273.29 crore (23.00% of FY26 revenue) from sales to the e-mobility sector.
p.184, p.264CRISIL Report verifies that Hero Motors is the only manufacturer and exporter of continuously variable transmission (CVT) hubs for e-bikes from India.
p.181, p.264Operates 6 manufacturing facilities across India, UK, and Thailand, supplying major global OEMs such as BMW, Ducati, enviolo, and Hero MotoCorp.
p.184, p.265Proprietary SWOT — Company-Specific
Strengths
- Leading market position in global e-bike powertrain components and sole Indian exporter of CVT hubs with first-mover advantage.
- Geographically diversified manufacturing and assembly footprint across 6 facilities in India, UK, and Thailand.
- Long-standing relationships with premier global OEMs including BMW, Ducati, enviolo, and Hero MotoCorp.
Weaknesses
- High customer concentration, with top 10 customers contributing 72.89% of Fiscal 2026 revenue from operations.
- Sub-optimal capacity utilization at international and joint venture manufacturing facilities in Thailand (3.87%), HYM (14.56%), and UK (24.19%).
Opportunities
- Rapid expansion of global e-bike market projected to reach 12.5-14.5 million units by 2031, boosting addressable demand for bike powertrains.
- Increasing premiumization and EV adoption in two-wheelers across India, Europe, and ASEAN markets.
Threats (material, not boilerplate)
- Loss of key OEM contracts or reduction in vehicle production volumes by major automotive clients. risk_section
Why it matters: Can significantly depress manufacturing plant utilization and operating profitability. - Competition from larger Chinese and European component suppliers with lower labor costs or higher financial scale. risk_section
Why it matters: Competitors such as Bafang, Shimano, and Mahle possess greater financial resources and market share in electric hub motors and transmissions.
Live Subscription Status
Allotment Status
Check your allotment on the registrar's portal → Registrar: KFin Technologies
Allotment is decided by the registrar, not by us and not by the exchange. In an oversubscribed retail book, allotment is by lottery, so a large application does not improve your odds beyond one lot. If money stays blocked after the refund date, the mandate expiry (30 Oct 2026) is the date to raise with your bank.
Analyst Q&A: Burning Questions
Facts from the filing. No recommendation — that layer arrives once our Research Analyst registration is live.
How will the ₹ 200.00 crore capital expenditure allocation at the Gautam Buddha Nagar facility impact operational capacity?
The capex will fund new equipment for precision gear, transmission, and e-drive component manufacturing lines at GB Nagar, expanding capacity where current utilization is high (88.25% for powertrain) to meet confirmed OEM order programs.
p.54, p.114, p.115What steps is management taking to address customer concentration, given that top 10 customers account for 72.89% of revenue?
Hero Motors is expanding its program pipeline across 11 new OEM awards commencing between 2025 and 2027 across Europe, India, and ASEAN, while scaling up private label accessories and micro-mobility products under the ESYNC brand.
p.9, p.196, p.294Why did consolidated net profit margins remain at ~3.46% in FY26 despite gross margins of ~41.69%?
Net margins are constrained by fixed overheads, depreciation (₹ 45.94 crore), finance costs (₹ 40.84 crore), and operational losses across ramping subsidiaries like Hero Thai and HYM. Debt reduction via IPO proceeds and scaling volume at overseas plants are expected to expand net margins.
p.348, p.350, p.537, p.544What is the status and operational implication of the withdrawal clauses triggered under the HYM Joint Venture with Yamaha?
Accumulated losses at HYM triggered exit clauses under the JV agreement. However, both Hero Motors (90%) and Yamaha (10%) have executed written confirmations of continued financial and operational support for at least 12 months, ensuring uninterrupted production of hub motors.
p.293What Earlier Investors Paid
Early capital takes real risk and is fairly rewarded for it — a large multiple built over many years is normal. What deserves a closer look is a steep step-up in a short window: a round priced cheaply only months before the offer.
| Shareholder | Priced at | When | vs IPO price |
|---|---|---|---|
| Amit Gupta | ₹10.00 | 2024-05-08 | 8.4x |
| Amit Gupta | ₹10.00 | 2024-07-16 | 8.4x |
| Amit Gupta | ₹10.00 | 2026-05-29 | 8.4x |
| This round priced within the last year, yet the offer is at roughly 8.4x that price. A step-up this steep in this little time is worth understanding: what changed in the business to justify it? | |||
| South Asia Growth Invest LLC & South Asia EBT Trust | ₹69.14 | 2026-09-04 | 1.2x |
| Amit Gupta & Others | ₹69.14 | 2026-09-04 | 1.2x |
| Allotted below the band — 1 entries | |||
| Amit Gupta to Gulshan Kumar Agarwal | ₹90.00 | 2026-05-27 | as disclosed |
The 1 allotments listed under “allotted below the band” are shown at their as-disclosed per-share price. They are not adjusted for any later bonus issue or share split, so where a company has issued bonus shares the raw multiple understates the true return and can even read as a loss when none was made. We show them as filed and decline to compute a misleading multiple.
Prices are as stated in the filing’s allotment history and are not adjusted for later bonus issues or share splits. Where a company has issued bonus shares, the multiples above understate the true return and can even read as losses. Adjusting for that is on our list; until it is done we would rather show the raw disclosure and tell you its limits than publish a confident number that is wrong.
Lock-in Expiry Calendar
Shares held before the IPO cannot be sold immediately; they unlock in tranches. When a tranche unlocks, more shares become eligible to trade. Retail investors are frequently caught unaware by these dates. The schedule below follows from the listing date; quantities are shown only where the filing discloses them.
- 23 Sep 2029Minimum Promoters' Contribution3 years
- 23 Sep 2027Promoters Excess Shareholding1 year
- 23 Mar 2027Pre-Offer Capital (Non-Promoters)6 months
An unlock means more shares may be sold — not that they will be, and not that the price will move. We state the dates; what you do with them is your call.
What Changed Between the DRHP and the RHP
Companies file a draft prospectus, then a final one. The changes in between are rarely reported, and they can be revealing.
| Item | In the DRHP | In the RHP / Addendum |
|---|---|---|
| Offer for Sale Total OFS amount remained ₹ 400.00 crore, but Bhagyoday Investments Private Limited withdrew as a selling shareholder, O P Munjal Holdings increased its OFS component to ₹ 395.00 crore, and Hero Cycles Limited reduced its OFS component to ₹ 50.00 crore. | ₹ 400.00 crore (O P Munjal Holdings ₹ 250.00 crore, Bhagyoday Investments ₹ 75.00 crore, Hero Cycles ₹ 75.00 crore) | ₹ 400.00 crore (O P Munjal Holdings ₹ 395.00 crore, Hero Cycles ₹ 50.00 crore) |
| Use of Proceeds Fresh Issue size increased by ₹ 100.00 crore from ₹ 500.00 crore in DRHP to ₹ 600.00 crore in RHP, increasing total offer size from ₹ 900.00 crore to ₹ 1,000.00 crore while retaining debt repayment and capex amounts. | ₹ 500.00 crore total Fresh Issue (₹ 190.00 crore debt repayment, ₹ 200.00 crore capex) | ₹ 600.00 crore total Fresh Issue (₹ 190.00 crore debt repayment, ₹ 200.00 crore capex) |
| Reporting Period Restated financial information was updated in RHP to include audited performance for Fiscal 2026 and Fiscal 2025, dropping Fiscals 2022 and 2023. | Fiscal 2024, Fiscal 2023, and Fiscal 2022 | Fiscal 2026, Fiscal 2025, and Fiscal 2024 |
| Risk Factors Risk factors count increased from 62 in DRHP to 80 in RHP, expanding disclosures regarding subsidiary operating losses, withdrawal triggers under the HYM JV, and regulatory approvals. | 62 risk factors | 80 risk factors |
| Promoter Holding Fully diluted pre-offer promoter holding percentage decreased from 74.45% in DRHP to 73.46% in RHP due to share capital expansion from ESOP exercises and CCPS conversions. | 74.45% fully diluted pre-offer shareholding (284,172,126 shares) | 73.46% fully diluted pre-offer shareholding (284,172,126 shares) |
| Contingent Liabilities Contingent liabilities decreased from ₹ 0.46 crore as of March 31, 2024 in DRHP to ₹ 0.35 crore as of March 31, 2026 in RHP. | ₹ 0.46 crore (as of March 31, 2024) | ₹ 0.35 crore (as of March 31, 2026) |
| Litigation Litigation materiality threshold was revised upward from ₹ 1.05 crore in DRHP to ₹ 1.52 crore in RHP based on updated revenue scale. | Materiality threshold of ₹ 1.05 crore | Materiality threshold of ₹ 1.52 crore |
Educational, grounded entirely in the company's filings (DRHP/RHP). Not investment advice. FinMinutes does not provide buy/sell recommendations.