Hero Motors Hit a Circuit After a ₹0.03 Promoter Sale

Hero Motors listed at ₹82 on the NSE on September 23, 2.38% below the ₹84 IPO price, then hit a 20% circuit at ₹98.40. On the BSE the open was ₹82.10, a 2.26% discount. The bounce made the morning look like a save. The sale that closed first was on the other side of the book.

This is not Hero MotoCorp. Hero Motors Limited, the Munjal-family powertrain firm out of Ludhiana, had just listed a ₹1,000 crore issue in which promoters sold ₹400 crore of old stock. O.P. Munjal Holdings took ₹395 crore of that at a certified cost of ₹0.03 a share.

O.P. Munjal Holdings Sold Shares It Bought for ₹0.03

The offer for sale was almost entirely one vehicle. O.P. Munjal Holdings, a promoter, sold 4.70 crore shares. Hero Cycles Limited, in the promoter group, sold 5.95 lakh shares for ₹5 crore. Bhagyoday Investments had been in the draft sale and then dropped out, after which O.P. Munjal Holdings raised its slice from ₹390 crore to ₹395 crore so the ₹400 crore sale still cleared.

The abridged prospectus filed with SEBI lists O.P. Munjal Holdings’ weighted average cost of ₹0.03 a share, rounded from ₹0.027. At ₹84, that stock went out at 2,800 times the certified cost. Hero Cycles’ cost is ₹10.07 a share. The cash from those shares does not go to the company.

WHO SOLD IN THE ₹400 CRORE OFFER FOR SALE

Promoter and promoter-group holding falls from 84.67% before the issue to 61.63% after it. O.P. Munjal Holdings alone held 70.6% going in. Pankaj Munjal, 63, is chairman. Abhishek Munjal, 35, is whole-time director. Amit Gupta is managing director and chief executive. The public now owns a real float. The family already took its cheque.

The Fresh Issue Shrank While the Offer for Sale Did Not

The company filed in June 2025 to raise ₹1,200 crore, with ₹800 crore of new shares and the same ₹400 crore sale. On August 29 it cut the fresh issue to ₹600 crore after SEBI allowed a size change of up to 50% without a full refile. The offer for sale stayed at ₹400 crore. An earlier draft from August 2024 had been withdrawn.

New money into Hero Motors is the ₹600 crore. Forty per cent of the public issue is a promoter exit that survived the cut. Post-issue equity is 45.42 crore shares, up from 38.28 crore, and at ₹84 that implied a market value of ₹3,815 crore.

WHERE THE ₹600 CRORE FRESH ISSUE GOES

• Debt paydown: ₹190 crore to repay or prepay borrowings, against total debt of ₹400.79 crore at the end of FY26 and a debt-to-equity ratio of 0.83.
• Gautam Buddha Nagar kit: ₹200 crore of equipment for the Uttar Pradesh powertrain plant, split as ₹66 crore in FY27, ₹60 crore in FY28 and ₹74 crore in FY29.
• Unnamed deals and general use: the balance, including issue costs, for acquisitions that have not been identified and for general corporate purposes.

The Gautam Buddha Nagar plant was already running at 88.3% of capacity in FY26, which is the case for buying gear-making kit. Other sites are not full. Thailand ran at 3.9% in FY26, down from 12% two years earlier, and slipped to a ₹6.7 crore loss. The UK operation was at 24.2%. Filling those floors is still a job for the new public shareholders, not for the sellers in the offer for sale.

QIBs Took the Book 1.49 Times

NSE figures show bids for 58.97 crore shares against 8.86 crore on offer, or 6.66 times overall. That headline hid the split. Qualified institutional buyers took their 50% slice 1.49 times. Non-institutional investors took 9.86 times. Retail took 8.23 times. Professional money barely covered the reservation. The oversubscription sat in the two groups that had less of the book.

HOW THE BOOK WAS COVERED

Anchors had already taken ₹300 crore on September 15, 3.57 crore shares at ₹84, including Societe Generale, ICICI Prudential AMC and 3P India Equity Fund, tied to investor Prashant Jain. Domestic mutual funds received 2.91 crore shares across 16 schemes. ICICI Prudential Life Insurance and Edelweiss Life Insurance were also in that book. Half those anchor shares unlock on October 21, the rest on December 20. ICICI Securities, DAM Capital Advisors and JM Financial ran the issue. KFin Technologies was the registrar. The lot was 178 shares, ₹14,952 at the cap.

A 1.49 times QIB cover is a completed book, not a scramble. It is also not a crowd. Combined with a grey-market quote that had slipped to a discount, it was a warning that ₹84 was a full price for a name still earning 8.53% on net worth.

The Half That Makes Stands Is Losing Money

Hero Motors gears, alloy parts and bike powertrains for OEMs. The abridged prospectus names BMW AG, Ducati Motor Holding, Enviolo International, Formula Motorsport, Hummingbird EV and HWA among customers, plus e-bike makers and some aerospace work. It runs six plants in India, the UK and Thailand, four of them in India, three in Ludhiana and one in Gautam Buddha Nagar, and employs 1,388 permanent staff. Hewland Engineering in the UK sits inside the group. A Yamaha joint venture in Ludhiana builds hub motors.

Offer documents split the firm in two. Powertrain solutions, gears, transmissions and e-bike drives, were 53.67% of FY26 sales, ₹637.8 crore, at a 16.3% segment margin. Alloys and metallics, the stands, swing arms, guards and sheet-metal parts, were 46.33%, ₹550.6 crore, and lost ₹15.9 crore at a -2.9% margin. Two years earlier that second half made ₹29.9 crore at 5.5%.

WHAT GREW AND WHAT DID NOT

EV sales rose from 12% of revenue in FY24 to 23% in FY26. Non-EV sales are lower than they were two years ago. Almost all of the FY26 increase in the top line came from electric products. Restated profit after tax was ₹41.17 crore in FY26, ₹32.80 crore in FY25 and ₹17.04 crore in FY24, on revenue of ₹1,188 crore, ₹1,090 crore and ₹1,064 crore. EBITDA was ₹147.78 crore, a 12.44% margin, up from 8.11% two years earlier. Return on equity was 8.56%. Return on capital employed was 19.77%. Net asset value was ₹12.72 a share.

The firm sells electric as well as non-electric powertrains, and the electric side is the part that is growing. The listed stock still carries the half that is not.

Why Hero Motors Opened Below the IPO Price

Unofficial grey-market quotes had already gone negative by the eve of listing. Trackers had the premium near ₹24, about 28.5% above the cap, around mid-September, then at about a ₹2 discount, which implied ₹82, the print the NSE then opened at. Grey-market prices are unregulated and can move fast. In this case they called the open, not the rest of the session.

Two other mainboard names listed the same morning. SS Retail opened around ₹639 against a ₹424 issue price. Jindal Supreme opened at ₹121.90 against ₹93. Hero Motors was the ₹1,000 crore issue in that trio, and the one that started under water. Restated FY26 profit of ₹41.17 crore against the ₹3,815 crore post-issue value at ₹84 is about 93 times earnings. That multiple, a 1.49 times QIB book and a faded grey-market quote are a cleaner read on the ₹82 open than the 6.66 times headline.

THE ISSUE THAT SHRANK AROUND A FIXED SALE

1. June 2025: Refiles for ₹1,200 crore, ₹800 crore fresh and ₹400 crore offer for sale.
2. August 29, 2026: Cuts the fresh issue to ₹600 crore; the ₹400 crore sale stays.
3. September 15, 2026: Anchors take ₹300 crore at ₹84.
4. September 16 to 18, 2026: Public bidding; allotment on September 21.
5. September 23, 2026: Lists at ₹82 on the NSE, then hits the 20% upper circuit at ₹98.40.

By late afternoon the stock was still at that ₹98.40 print, 17.14% above the issue price and 20% above the open, with a market value of about ₹4,469 crore. Selling the ₹82 open on a retail-heavy book left that circuit on the table. That is listing-day cash, not a new reading of 93 times earnings. Mahesh M. Ojha, vice president for research at Kantilal Chhaganlal Securities, had already told allotted holders to think about taking a pop if one appeared.

Investors may consider booking gains if there is a strong listing pop.

Mahesh M. Ojha, Vice President, Research and Business Development, Kantilal Chhaganlal Securities

One Buyer Still Accounts for 36% of Sales

The largest customer was 35.6% of FY26 revenue, about ₹423 crore. The top five were 61.4%. The top 10 were 72.9%. Those shares have eased since FY24, when the top 10 were 77%, and they are still high enough that one cancelled programme would show up in the next quarter. International customers were 41.4% of sales.

FOUR FIGURES THAT OUTLAST THE CIRCUIT

• Open to circuit: ₹82 to ₹98.40, a 20% upper band from the NSE listing print.
• QIB cover: 1.49 times, against 8.23 times retail and 9.86 times non-institutional.
• Top customer: 35.6% of FY26 revenue, with the top 10 at 72.9%.
• Issue-price multiple: about 93 times restated FY26 profit of ₹41.17 crore.

Shivani Nyati, head of wealth at Swastika Investmart, called the post-listing stance Neutral and said holders could sit with a stop around ₹75 to ₹77 while new money waited for a calmer price. Ojha wanted fresh buyers to wait for one or two quarterly results before treating the name as a long-term holding. Both were talking about earnings, margins and a concentrated book, not about whether a circuit looks better than a discount.

Anchor stock starts coming free on October 21. The Gautam Buddha Nagar kit spends out through FY29. Alloys and metallics have to earn again if the 93-times multiple is going to rest on more than e-bike hubs. O.P. Munjal Holdings already sold at ₹84. Public holders now own the tape after that sale, including the ₹98.40 print and whatever follows it.

Disclaimer: This article is news reporting and analysis of Hero Motors’ September 23, 2026 listing and the related public offer. It is informational only and is not investment advice, a research report, a solicitation to buy or sell any security, or a recommendation to subscribe to, hold or exit Hero Motors or any other IPO. Readers should consult a SEBI-registered investment adviser or other qualified financial professional who can consider their own objectives, risk limit and tax position before acting. Share prices, subscription figures, grey-market quotes, multiples and corporate statuses are taken from the documents and market prints cited here and can change.