Hero Motors shares staged another sharp rally on Friday, September 25, continuing the strong recovery that followed their lacklustre stock market debut earlier this week. The newly listed stock climbed as much as 20% during the session, taking its gains from the ₹84 IPO price to nearly 69%.
The stock began Friday’s session at ₹130, representing a 10% premium to its previous close of ₹118.21, and subsequently touched an intraday high of ₹141.85, up 20%.
Friday marked the third consecutive session of gains for Hero Motors. The stock had advanced 20% in the previous session and gained more than 17% on its listing day.
The rally came despite a weak debut on Wednesday, September 23. Hero Motors had listed at ₹82 on the NSE, a discount of 2.38% to its issue price. On the BSE, shares debuted at ₹82.10, representing a 2.26% discount.
Hero Motors shares rally: What should investors do?
Hero Motors’ sharp post-listing recovery has brought the stock back into focus, with investors now assessing whether the recent gains can be sustained. While the company operates across the growing automotive technology and powertrain segments, its current valuation, profitability metrics and customer concentration remain important factors to consider before taking a fresh position.
Ravi Singh, Chief Research Officer at Master Capital Services, highlighted Hero Motors’ position as an automotive technology player supplying engineered powertrain solutions to global original equipment manufacturers (OEMs) across the US, Europe, India and ASEAN. He noted that the India’s two-wheeler industry is projected to grow at 6-7% CAGR to 29-31 million units by FY31, while the gears and transmissions market is expected to grow at 6-8% CAGR between CY25 and CY31. Singh said the weak listing could weigh on near-term sentiment and fresh investors could wait for the stock to stabilise. The longer-term outlook would depend on Hero Motors’ ability to maintain growth while improving profitability and cash generation.
Meanwhile, Shivani Nyati, Head of Wealth at Swastika Investmart Ltd, also highlighted the company’s powertrain presence and opportunities arising from EV growth, but flagged its premium valuation and high customer concentration.
“While the company benefits from a strong position in powertrain solutions and the growth potential of EVs, its valuation at around 69–74x P/E remains significantly higher than the peer average of 50.2x,” Nyati said.
Hero Motors’ Return on Net Worth (RoNW) has improved to 8.53%, while its EBITDA margin stands at around 10.2%. However, both remain below key peers. Nyati maintained a Neutral post-listing view, saying fresh investors could wait for a better valuation or price consolidation. Existing investors could consider holding the stock with a stop-loss at around ₹75-77.
Furthermore, Mahesh M. Ojha, Vice President – Research & Business Development at Kantilal Chhaganlal Securities, stated that Hero Motors is in a bullish trend and the technical setup remains positive, with strong volumes recorded over the last three trading sessions. The stock has a target of ₹160-168, while ₹118 should be maintained as the stop-loss, he added.
Hero Motors IPO details
The ₹1,000-crore Hero Motors IPO received 6.66 times subscription during the three-day bidding period. It comprised a fresh issue of up to ₹600 crore and an Offer-for-Sale (OFS) of up to ₹400 crore.
Of the fresh proceeds, ₹190 crore will go towards repayment or prepayment of certain outstanding borrowings, while ₹200 crore has been allocated to equipment purchases for capacity expansion at its Gautam Buddha Nagar, Uttar Pradesh facility.
The balance will fund inorganic growth, including potential acquisitions that are yet to be identified, other strategic initiatives and general corporate purposes.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
