Hero Motors IPO Subscribed 3.37 Times on Day 2 as Retail Demand Surges

Hero Motors Limited's initial public offering picked up significant momentum on its second day of bidding on Thursday, with the issue subscribed 3.37 times overall as retail investors piled in, a sharp jump from the muted institutional response seen so far.

Strong retail and NII interest

According to data available on the exchanges, the IPO received bids for 29.82 crore equity shares against the 8.86 crore shares on offer. The retail investor category led the charge, subscribed 5.02 times, while non-institutional investors booked their portion 3.9 times. The qualified institutional buyers segment, however, remained subdued at just 0.07 times subscribed, a pattern common in Indian IPOs where large institutional investors typically place the bulk of their bids only on the final day of bidding. The issue opened for subscription on Wednesday and is scheduled to close on Friday.

Inside the offer

Hero Motors has set a price band of Rs 79 to Rs 84 per equity share, with a face value of Rs 10, and a minimum bid lot of 178 shares. The IPO comprises a fresh issue of up to Rs 600 crore alongside an offer for sale of shares worth up to Rs 400 crore from promoters O P Munjal Holdings and Hero Cycles Limited, taking the total issue size to roughly Rs 1,000 crore. Of the fresh issue proceeds, Rs 190 crore is earmarked for repaying or prepaying existing borrowings, while another Rs 200 crore will fund capacity expansion, including new equipment, at the company's manufacturing facility in Gautam Buddha Nagar, Uttar Pradesh. The remaining proceeds are set aside for unidentified inorganic growth opportunities and general corporate purposes.

A different bet from India's other big IPO

Hero Motors describes itself as an India-based automotive technology company that designs, develops, manufactures and supplies engineered powertrain solutions to original equipment manufacturers across the US, Europe, India and the ASEAN region, operating primarily as a B2B supplier with capabilities spanning design, prototyping, validation and manufacturing. The listing arrives in the same week as the far larger initial public offering of the National Stock Exchange, meaning Indian retail investors have had two very different primary market bets to weigh simultaneously this week, one an exchange operator and the other a components manufacturer betting on the shift toward electric and hybrid powertrains.

Brokerages including Anand Rathi, BP Wealth and Ventura Securities have all recommended subscribing to the issue, though they flagged that valuations are far from cheap. At the top end of the price band, Anand Rathi pegged the stock at a price-to-earnings multiple of 92.6 times FY26 earnings, while BP Wealth calculated a comparatively lower 73.7 times based on diluted earnings per share of Rs 1.1. BP Wealth pointed to the company's expanding e-mobility portfolio, established relationships with global OEMs and continued investment in manufacturing capability as reasons for its positive view, even as it acknowledged the rich pricing baked into the offer.

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