Hero Motors is the only Indian manufacturer exporting CVT hubs to global e-bike OEMs and is filing a ₹1,000 Cr IPO on September 16, 2026. It supplies gearboxes and transmission systems to BMW, Ducati and Hero MotoCorp.
IPO Summary
| Hero Motors IPO Details | |
|---|---|
| IPO Date | 16th Sep to 18th Sep, 2026 |
| Sale Type | Fresh Issue + OFS |
| Tentative Listing Date | 17th Sep, 2026 |
| Price Band | ₹79 to ₹84 |
| Post Issue M. Cap at 84 | ₹3,815 Cr |
| Total Issue Size | ₹1,000 Cr |
Industry Overview
The market for gears and transmission systems is expected to grow from ₹3,400-3,500 billion in 2025 to ₹4,850-4,950 billion by 2031, at a CAGR of 6-8%.
The growing market for the bike powertrain segment and increasing EV penetration are key growth drivers for this industry.
Hero Motors Limited operates at the intersection of these trends as a powertrain solutions and alloy/metallic components supplier to automotive OEMs across India, Europe, the US, and the ASEAN region.
Business Model Explained
The company is part of the Hero Motors Company (HMC) group. It designs, develops, manufactures, and supplies powertrain solutions and alloy/metallic components to automotive OEMs globally.
Its marquee clientele includes BMW, Ducati, Hero MotoCorp, Enviolo, HWA, and Formula Motorsport, among others.
Powertrain in simple words refers to systems that generate power and deliver it to a vehicle’s wheels.
The business is organised into two segments:
1. Powertrain Solutions (54% of FY26 revenue) is split into Gears & Transmission (G&T) and Bike Powertrain (BPT).
- G&T supplies gearbox assemblies, transmission systems and gear sets for two-wheelers, performance cars, off-road vehicles, and aerospace applications.
- BPT focuses on the micro-mobility sector, supplying CVT hubs (based on enviolo’s patented CVP technology), electric motors (through a JV with Yamaha Motors Japan under the HYM brand), and integrated electric drive units (EDUs) under the ESYNC brand.
2. Alloys & Metallics (46% of FY26 revenue) produces sheet metal and tubular assemblies such as chain cases, swing arms, engine guards, suspension forks, handlebars and cylinder blocks for automotive, bicycle and e-bike OEMs.
Hero Motors is the only company manufacturing and exporting CVT hubs to global e-bike OEMs from India.
The company operates six manufacturing facilities across India, the United Kingdom, and Thailand, along with two technology centres in Southam UK, and India. Two additional facilities in Ludhiana and Bengaluru are under development.
Below is a chart set forth showcasing various types of industries Hero Motors serves!
Operating Metrics
- Segment Revenue Mix: Powertrain Solutions overtook A&M as the larger segment for the first time in FY26. Within Powertrain, Bike Powertrain nearly doubled from ₹82 Cr to ₹149 Cr as e-bike demand recovered after a weak FY25.
- EV vs Non-EV Revenue Split: EV revenue more than doubled in two years, growing at a CAGR of 46%. The non-EV base has stayed flat, meaning growth is coming from EV products.
- Geographic Revenue Mix: The sharp rise in European revenue in FY26 (+29% YoY) was driven by e-bike and premium two-wheeler powertrain orders, while US revenue halved.
The Financial Stuff: From Revenue to PAT
- Revenue grew at a 5.7% CAGR over FY24-FY26, but EBITDA grew at 31% CAGR and PAT at 55% CAGR.
- The key driver was a 5.2% drop in raw material cost as a share of revenue (from 60% to 55%), a combination of better input prices and a higher-value product mix.
- PAT margin is still thin at 3.5%, reflecting the business’s capital-intensive nature and high leverage.
Hero Motors’ Peers – FY26
- Unlike Sona BLW, Hero Motors carries meaningful debt (Net Debt/EBITDA of 2.24x vs net cash for Sona BLW) and has a much thinner PAT margin of 3.5%.
- Hero Motors’ RoNW at 8.5% is the lowest in the peer set, reflecting the capital-intensive expansion phase the business is in.
At the upper price band of ₹84, Hero Motors is trading at a P/E of 92, while its peers are trading at an average P/E of 50.
Key Risks
• Customer concentration: The top 10 customers accounted for 73% of FY26 revenue, with the single largest customer contributing 35.57%. Loss of a major customer, or a downturn in their production volumes, would directly impact Hero Motors’ revenue.
• Under-utilisation of newer facilities: Capacity utilisation at the HYM facility (JV with Yamaha) was just 15% in FY26, while the Thailand facility ran at 4%. These facilities represent significant invested capital that is not yet generating proportionate returns.
Summary
Hero Motors is a niche powertrain solutions company riding the structural shift toward EVs and a growing order book from premium global OEMs.
The valuation rests on the EV growth narrative as the company’s EV segment revenue is growing at 46% CAGR.
