Hero Motors shares make weak debut; list at 2% discount to IPO price on NSE — should you buy, sell or…

The latest market report highlights that Hero Motors shares made a weak debut on the bourses on September 23, stock-exchange debut at a discount to the firm's initial public offering (IPO) price after the offering received firm subscription from market participants.

The stock opened at Rs 82 on the NSE, marking a 2.38 percent discount to the IPO price of Rs 84 per share. On the BSE, Hero Motors shares debuted at Rs 82.10, translating into a 2.26 percent discount to the offering price.

Following the stock-exchange debut, Hero Motors' market capitalisation stood at around Rs 3,729.11 crore.

The weak market debut was broadly in line with the grey market trend ahead of the stock-exchange debut. According to InvestorGain, the Hero Motors IPO's grey market premium (GMP) had indicated a stock-exchange debut price below the IPO's upper price range.

Read Additionally: NSE IPO stock-exchange debut date: GMP drops to 2.5% ahead of market debut tomorrow; check allotment status, other key details

GMP is an unofficial indicator based on transactions in the unregulated grey market. It can change sharply and does not guarantee the actual stock-exchange debut price or future returns.

The Rs 1,000-crore Hero Motors IPO received bids for 58,97,24,146 shares against 8,86,07,596 shares on offer, according to NSE data.

The retail portion was subscribed 8.23 times, while the non-institutional investor (NII) category received 9.86 times subscription. The qualified institutional buyers (QIB) portion was subscribed 1.49 times.

Hero Motors had set the IPO price range at Rs 79-84 per share. The Rs 1,000-crore offering comprised a fresh offering of shares worth Rs 600 crore and an offer-for-sale (OFS) component of Rs 400 crore.

Ahead of the public offering, Hero Motors boosted around Rs 300 crore from anchor market participants by allotting 3.57 crore shares at Rs 84 apiece.

The anchor book included market participants such as Societe Generale, ICICI Prudential AMC and 3P India Equity Fund, associated with investor Prashant Jain.

Domestic mutual funds received 2.91 crore shares through 16 schemes. ICICI Prudential Life Insurance and Edelweiss Life Insurance were additionally among the market participants in the anchor allocation.

Hero Motors plans to use Rs 190 crore from the fresh offering towards repayment or prepayment of certain borrowings.

Another Rs 200 crore has been earmarked for purchasing equipment for capacity expansion at its facility in Gautam Buddha Nagar, Uttar Pradesh.

The remaining proceeds will be used to fund inorganic expansion through unidentified acquisitions and strategic initiatives, besides general corporate purposes. Should you buy, sell or hold?

According to Mahesh M. Ojha, Vice President – Research & Business Development at Kantilal Chhaganlal Securities Pvt. Ltd., Hero Motors’ technology capabilities and diversified powertrain portfolio give it a differentiated position across the automotive sector.

He highlighted the firm’s in-house engineering capabilities, global customer base and presence across CVT hubs, EV transmissions, electric motors and integrated drive units. According to Ojha, these capabilities provide the firm with a differentiated positioning, particularly in premium ICE and e-bike powertrain markets.

That stated, valuation stays a key concern. “At around 74x FY26 P/E (pre-IPO), the stock is valued at a premium to the peer average of around 50.2x, leaving limited valuation cushion despite the firm’s firm technology profile and long-term EV expansion opportunity,” Ojha stated.

He additionally flagged customer concentration as a risk, noting that the top 10 customers contribute around 73–78% of Hero Motors’ topline.

For market participants who received an allotment, Ojha stated, “Market participants may consider booking upside if there is a firm stock-exchange debut pop.” For fresh market participants, he suggested waiting for price stabilisation after stock-exchange debut and assessing one to two quarterly earnings before taking a long-term position.

“This approach would provide greater visibility on earnings expansion, margins and the ability to justify the premium valuation,” Ojha stated.

Hero Motors designs and manufactures engineered powertrain solutions for automotive original equipment manufacturers (OEMs). The firm has operations across India, the US, Europe and the ASEAN region.

The IPO was managed by ICICI Securities, DAM Capital Advisors and JM Financial, while KFin Technologies is the registrar to the offering.