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In the Indian Primary Capital Market, the attraction of investors towards automotive component manufacturing companies is once again seen at its peak. The much-awaited ₹1,000 crore initial public offering (IPO) of leading auto component and powertrain solutions provider Hero Motors opened for retail and institutional bidders on Wednesday, September 16, 2026. Within the first few hours of the opening of the public issue, investors placed huge bets on it, due to which the issue was completely filled by being subscribed 1.01 times by 2 pm on the very first day. Heavy buying by domestic institutional investors, veteran fund managers and retail investors has confirmed that the demand for premium engineering and global supply chain companies in the automobile sector is very strong. The company has set an attractive price band of ₹79 to ₹84 per equity share for its public issue, which market analysts say is based on fair valuations.
₹600 crore fresh issue and lot size: Complete betting details for retail investors
The structure of this total public issue of ₹ 1,000 crore of Hero Motors has been prepared in a very balanced manner. This includes a brand new equity fresh issue worth about ₹600 crore, while the remaining amount will come under Offer for Sale (OFS) from existing promoters and shareholders. For the convenience of retail investors, the minimum lot size has been fixed at 178 shares. This means that based on the upper price band of ₹84, a retail investor will have to invest a minimum capital of ₹14,952 to apply for at least one lot. At the same time, investors making the maximum bid under the retail quota can submit their applications for a total of 13 lots i.e. 2,314 shares, for which they will require a total capital of ₹ 1,94,376 at the upper price band.
Just a day before the start of the public bidding, the company had made a strong start by raising about ₹300 crore through its Anchor Book. The company allotted 3.57 crore equity shares to top global and domestic institutional investors at a peak price of ₹84 per share. In this list of anchor investors, France’s leading financial firm Societe Generale, India’s top asset management company ICICI Prudential AMC and the prestigious ‘3P India Equity Fund’ led by veteran fund manager Prashant Jain were prominently included. Of the total anchor allotment, 2.91 crore shares were given to the country’s seven leading domestic mutual funds through their 16 different schemes, while from the insurance sector, ICICI Prudential Life Insurance and Edelweiss Life Insurance also expressed deep confidence in the company’s long-term prospects by buying large stakes.
Strategic use of capital: Debt will be reduced by ₹190 crore and there will be major expansion of UP plant
Hero Motors will utilize the net capital infusion of approximately ₹600 crore from the fresh component of the public issue to strengthen its financial structure and take manufacturing capabilities to new heights. According to the red herring prospectus (RHP) filed by the company, the amount of about ₹190 crore will be directly used for prepayment or repayment of existing high-interest loans outstanding with the company. This debt reduction will significantly reduce the company’s interest expenses, which will lead to direct improvement in net profit margins and balance sheet liquidity in the coming quarters.
Additionally, the company has allocated huge capital of around ₹200 crore for its industrial and production expansion. This huge amount will be spent on installing modern technical machinery and advanced manufacturing equipment in the manufacturing plant located in Gautam Buddha Nagar (Noida), a major industrial cluster of Uttar Pradesh. The increased production capacity at this plant will help the company meet the huge export orders received from global automobile companies in a timely manner. The remaining capital raised from the fresh issue will be used for inorganic growth through strategic acquisitions, enhanced R&D and general corporate activities.
23% GMP shines in gray market: Will there be big profits on listing on September 23?
The direct impact of the stormy response to the public issue on Dalal Street is also visible in the informal gray market. According to the latest data from leading tracking platform InvestorGain, on September 16, unlisted shares of Hero Motors were trading at a premium of around ₹19 to ₹20 per share in the gray market, indicating a strong gray market premium (GMP) of around 23 per cent against the issue’s upper price band of ₹84. Based on this informal trend, market analysts are estimating that if the secondary market sentiment remains favourable, the stock may list in the market with a strong double-digit premium around the ₹103 to ₹105 level.
However, experienced market experts have clearly cautioned that the gray market premium is entirely an informal, unregulated and speculative indicator. It is subject to sharp fluctuations up to the date of actual listing of the shares and does not in any case offer a legal guarantee of a fixed listing profit. Therefore investors should take investment decisions by thoroughly evaluating the company’s fundamental financial performance, order book and technical efficiency rather than relying solely on GMPs.
Big clients like BMW and Ducati: Hero dominates the global powertrain world
Hero Motors’ core business is to design, develop and manufacture highly advanced, precision and customized powertrain solutions for global and domestic automobile majors. The company is not limited to just conventional internal combustion engines (ICE), but also manufactures transmissions, gears and complex electronic-mechanical systems for emerging electric mobility (EV) and hybrid vehicles. The company’s industrial presence is not limited to the Indian subcontinent, rather its strong export network extends deep into the United States, Europe and advanced markets in the ASEAN region.
The company’s global client portfolio includes world-renowned companies such as luxury two-wheeler and sports car manufacturer BMW AG, renowned Italian superbike manufacturer Ducati Motor Holding, innovative e-bike mobility firm Enviolo International, Formula Motorsport and motorsports engineering giant HWA AG. ICICI Securities, DAM Capital Advisors and JM Financial are acting as the lead book running lead managers to the issue, while KFin Technologies has been appointed as the official registrar. If everything goes as per schedule, the formal listing of the company’s shares on both the major stock exchanges—Bombay Stock Exchange (BSE) and National Stock Exchange (NSE)—will be completed on September 23, 2026.