Hero Motors Eyes Technology Acquisitions Ahead Of IPO; Plans To Expand Customer Base, Global Reach

Hero Motors is evaluating potential acquisitions in the technology segment as the automotive component manufacturer looks to strengthen its engineering capabilities, diversify its customer portfolio and increase its presence across international markets.

The company, which is preparing for its upcoming initial public offering (IPO), is considering one or two technology-focused opportunities in India and the UK. However, Hero Motors has not entered into any binding agreement for an acquisition so far.

Hero Motors IPO: Rs 1,000 Crore Issue To Open

Hero Motors has set the IPO price band at Rs 79-84 per share. The Rs 1,000 crore public issue will remain open from September 16 to September 18.

The IPO consists of a fresh issue of up to Rs 600 crore and an offer for sale (OFS) worth up to Rs 400 crore by promoters O P Munjal Holdings and Hero Cycles.

From the fresh issue proceeds, the company plans to allocate Rs 190 crore towards repayment, prepayment or redemption of borrowings. Another Rs 200 crore has been earmarked for equipment purchases linked to capacity expansion at its Gautam Buddha Nagar facility in Uttar Pradesh.

The balance will be available for acquisitions, strategic initiatives and general corporate requirements.

Technology Acquisitions To Strengthen R&D Capabilities

Hero Motors is assessing acquisition targets that can add to its existing technology portfolio and enhance its research and development (R&D) capabilities in India and the UK.

The company's management indicated that future inorganic investments could serve multiple purposes, including adding new technologies, entering additional markets and reaching a wider set of customers.

As outlined in its red herring prospectus (RHP), Hero Motors intends to selectively pursue acquisitions, investments and partnerships that complement its existing operations. The company has also set a ceiling on such deployment, with acquisitions and strategic initiatives not exceeding 25% of the gross proceeds from the fresh issue.

The company has previously relied on acquisitions and strategic investments to broaden its technology and product capabilities.

Hero Motors first purchased a 32% strategic stake in UK-based transmission engineering company Hewland Engineering before subsequently acquiring a majority stake in the business.

It also acquired Spur Technologies in FY24. The company manufactures components for premium motorcycles and electric bikes.

Customer Concentration Remains in Focus

Diversifying its customer base remains an important objective for Hero Motors. Although dependence on major customers has reduced, a significant share of revenue continues to come from its largest accounts.

The company's biggest customer contributed 35.57% of revenue from operations in FY26, compared with 38.80% in FY25. The share of the top five customers also declined to 61.42% from 63.39%, while the top 10 customers accounted for 72.89% of revenue, against 78.03% a year earlier.

Hero Motors expects the customer mix to become more diversified as recently secured programmes move towards higher production volumes.

International Revenue Accounts For Over 40%

Hero Motors has maintained a sizeable international business, with overseas customers contributing roughly two-fifths of revenue over the past three financial years.

International customers generated Rs 491.53 crore, equivalent to 41.36% of revenue from operations, in FY26. The corresponding contribution stood at 40.94% in FY25 and 41.28% in FY24.

The company supplied products and services across 23 countries during FY26 and expects exports to gain further importance. Its Powertrain Solutions division contributes significantly to overseas business.