Hero Motors IPO Day 1: Retail Section Fully Booked; GMP Spikes To 12%; Is It A Good Bet?

Hero Motors IPO has finally opened for subscription on Wednesday, September 16, and will be open until September 18. The Rs. 1,000 crore IPO is gaining massive attention in the grey market, with the latest Hero Motors IPO GMP at around Rs. 10 per share as of September 16.

However, investors should note that GMP is an unofficial and unregulated indicator and does not guarantee the actual listing price or listing gains.

Hero Motors IPO GMP Today

At the upper end of the IPO price band of Rs. 84, a GMP of Rs. 10 indicates an estimated listing price of Rs. 94 per share hinting towards a potential premium of around 11.90% over the issue price, if the trend sustains till the listing.

For the minimum lot size of 178 shares, a GMP of Rs. 10 means an indicative gain of around Rs. 3,382 per lot, if the grey-market premium is reflected in the listing price.

The GMP, however, has cooled from its recent high. It was around Rs. 24 on September 12 and 13 before declining to Rs. 23 on September 14 and Rs. 19 on September 15 and now Rs. 10 for today.

Hero Motors IPO Subscription Status

The Hero Motors IPO opened on September 16 and will close on September 18. So far on the first day the IPO has been subscribed 0.86 times overall. The issue is subscribed 1.44 times in the retail category and 0.63 times in the NII category and the QIB category has not seen any subscription yet. Since the IPO has only opened today, subscription numbers can change significantly during the three-day bidding period.

Hero Motors IPO Details

The issue has a price band of Rs. 79 to ₹84 per share, with a lot size of 178 shares. Retail investors need a minimum investment of Rs .14,952 to apply for one lot at the upper price band.

The IPO comprises a fresh issue of 7.14 crore shares worth Rs. 600 crore and an offer for sale (OFS) of 4.76 crore shares worth Rs. 400 crore, taking the total issue size to Rs. 1,000 crore.

The shares are proposed to list on both the NSE and BSE on September 23.

Hero Motors IPO: Financial Performance

The company has reported improvement in revenue, EBITDA and profit over the past three financial years.

Should You Bet On the Hero Motors IPO?

Two Brokerages who have reviewed the IPO are fairly neutral on the issue.Swastika Investmart, in its IPO review, said "Hero Motors is a leading powertrain provider with a first-mover advantage in global e-bike CVT hubs. However, the company's price-to-earnings (P/E) ratio of around 69-74 times is higher than the peer average of 50.2 times, leaving limited room for upside.

The brokerage said, "the company's Return on Net Worth (RoNW) improved to 8.53%, while its EBITDA margin stood at around 10.2%, although both remained below those of key peers. It also flagged customer concentration as a risk, with the company's top 10 customers accounting for around 73-78% of revenue. Our View: Neutral, given the strong business and EV growth potential, but high valuation limits the upside cushion."