Hero Motors share price hits 20% upper circuit after making a tepid debut on the bourses on Wednesday, 23 September. The stock opened below its IPO price of ₹84 per share but saw fresh buying after listing.
Hero Motors share price was trading at ₹98.40 apiece on the NSE, up 17.14% from its issue price of ₹84. On the BSE, the stock was quoted at ₹98.51, representing a 17.27% gain over the IPO issue price.
On the NSE, Hero Motors shares opened at ₹82, down 2.38% from the issue price. On the BSE, the stock debuted at ₹82.10, a 2.26% discount to the IPO price. The ₹1,000-crore Hero Motors IPO was subscribed 6.66 times during the three-day bidding period.
The stock subsequently recovered from its weak debut, with experts pointing to buying interest after listing while highlighting valuation and execution risks.
Hero Motors valuation remains a key concern
Shivani Nyati, Head of Wealth at Swastika Investmart, said Hero Motors benefits from its strong position in powertrain solutions and the growth potential of electric vehicles. However, she noted that the stock’s valuation at around 69–74 times price-to-earnings (P/E) is significantly above the peer average of 50.2 times.
“Although RoNW has improved to 8.53% and EBITDA margin to around 10.2%, both remain below key peers, while high customer concentration adds another risk,” Nyati said.
Given the company’s growth prospects but limited valuation cushion, Nyati said her post-listing view is neutral. She added that fresh investors could wait for better valuations or price consolidation, while existing investors could consider holding with a stop-loss around ₹75–77.
Auto, EV markets offer long-term growth opportunity
Dr Ravi Singh, Chief Research Officer at Master Capital Services, said India’s two-wheeler industry is projected to grow at a 6–7% CAGR to 29–31 million units by FY31. The gears and transmissions market is expected to grow at 6–8% CAGR between CY25 and CY31, while the electric-drive motor market could expand at a 28–32% CAGR through CY31.
Singh said the weak listing could keep near-term sentiment under pressure, potentially prompting fresh investors to wait for greater price stability. According to him, the longer-term outlook will depend on Hero Motors’ ability to sustain growth, improve profitability and generate cash.
Experts advise waiting for price stability
Mahesh M. Ojha, Vice President – Research & Business Development at Kantilal Chhaganlal Securities, said investors who received an allotment may consider booking gains if the stock sees a strong listing-led rise.
For fresh investors, Ojha suggested waiting for price stabilisation and assessing one to two quarterly results before taking a long-term position. This, he said, could provide greater visibility on earnings growth, margins and the company’s ability to justify its premium valuation.
What lies ahead for Hero Motors stock?
The sharp recovery after a weak debut puts the focus on whether Hero Motors can sustain buying interest at higher levels. While its exposure to powertrain solutions, EVs and the broader automotive growth opportunity provides potential growth drivers, analysts have flagged valuation, margins, customer concentration and cash generation as key factors to monitor.
Hero Motors IPO details
The mainboard IPO comprises a fresh issue of equity shares aggregating up to ₹600 crore and an Offer-for-Sale (OFS) component worth up to ₹400 crore.
Of the fresh issue proceeds, ₹190 crore will be used to repay or prepay certain outstanding borrowings, while ₹200 crore has been earmarked for purchasing equipment to support capacity expansion at the company’s facility in Gautam Buddha Nagar, Uttar Pradesh.
The remaining proceeds from the fresh issue will be utilised for inorganic growth, including potential acquisitions that have not yet been identified, along with other strategic initiatives and general corporate purposes.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
