New Delhi: Hero Motors shares extended their sharp post-listing rally on Friday, September 25, hitting the 20% upper circuit for the third consecutive trading session after making a muted debut on the Indian stock exchanges.

The newly listed stock surged to around Rs 141.85 per share on the BSE, taking its gain to nearly 73% from its NSE listing price of Rs 82. The sharp recovery comes just two days after Hero Motors made a weak debut below its IPO issue price.

Hero Motors had listed at Rs 82 on the NSE, a discount of 2.38% to its issue price of Rs 84. On the BSE, the stock opened at Rs 82.10, down 2.26% from the issue price.

Hero Motors stock rallies after weak debut

The stock’s performance changed sharply after its subdued listing.

On the first trading day, Hero Motors shares recovered from the discounted debut and eventually hit the 20% upper circuit at Rs 98.40 on the NSE. The stock then continued its upward movement on Thursday, with Business Standard reporting an intraday high of Rs 116.80.

The rally continued into Friday, with the stock reaching around Rs 141.85 on the BSE.

At the latest level cited, the stock had gained roughly 73% from the NSE listing price of Rs 82. The rise from the IPO issue price of Rs 84 was slightly lower.

The sharp movement has also significantly increased Hero Motors’ market value since its listing.

Rs 1,000 crore IPO received 6.66 times subscription

Hero Motors raised Rs 1,000 crore through its initial public offering, which was open for subscription from September 16 to September 18.

The issue was subscribed 6.66 times, receiving bids for 58.97 crore shares against 8.86 crore shares on offer. The QIB portion was subscribed 1.49 times, while the NII and retail portions were subscribed 9.86 times and 8.23 times, respectively.

The IPO comprised a fresh issue worth Rs 600 crore and an offer for sale of Rs 400 crore by O.P. Munjal Holdings and Hero Cycles.

The price band was fixed at Rs 79-84 per share, with the company ultimately allotting shares at the upper end of the band.

Where will the IPO proceeds be used?

Hero Motors has outlined several uses for the proceeds from the fresh issue.

The company plans to use around Rs 190 crore towards repayment or prepayment of certain borrowings. Another Rs 200 crore is earmarked for capital expenditure, primarily for equipment required to expand capacity at its Gautam Buddha Nagar facility in Uttar Pradesh.

The capital expenditure is expected to be deployed in phases through FY29.

The company also plans to use part of the proceeds for inorganic growth initiatives and general corporate purposes.

Hero Motors is additionally setting up manufacturing facilities in Ludhiana, Punjab, and Bengaluru, Karnataka, as part of its expansion plans.

Hero Motors’ business and financial performance

Hero Motors is an automotive technology company that designs, develops and manufactures engineered powertrain solutions for automotive original equipment manufacturers.

Its products cover electric and non-electric applications across two-wheelers, e-bikes, performance vehicles, off-road vehicles, electric and hybrid cars and heavy-duty vehicles.

The company operates through its Powertrain Solutions and Alloys & Metallics segments and had six manufacturing facilities across India, the UK and Thailand as of March 31, 2026.

In FY26, Powertrain Solutions contributed 53.67% of revenue, while Alloys & Metallics contributed 46.33%.

For the year ended March 31, 2026, Hero Motors reported consolidated sales of Rs 1,188.35 crore and net profit of Rs 41.17 crore.

Analyst flags valuation and customer concentration

Despite the strong post-listing rally, analysts have raised concerns over the stock’s valuation.

Shivani Nyati, Head of Wealth at Swastika Investmart, said Hero Motors benefits from its position in powertrain solutions and the growth potential of electric vehicles. However, she noted that the company’s valuation at around 69-74 times price-to-earnings was significantly above the peer average of 50.2 times.

Nyati also pointed to the company’s return on net worth of 8.53% and EBITDA margin of around 10.2%, which she said remained below key peers. She also identified customer concentration as an additional risk.

Her assessment of the stock was described as “Neutral”, reflecting the contrast between the company’s business prospects and its valuation.

Hero Motors stock’s three-day journey

Hero Motors’ market debut and subsequent rally have produced a sharp reversal in investor sentiment over just three trading sessions.

The stock first listed below its Rs 84 issue price at Rs 82 on the NSE and Rs 82.10 on the BSE. It then hit the upper circuit on its first trading day, continued its advance on Thursday and reached another 20% upper circuit level on Friday.

The move highlights the difference between an IPO’s initial listing performance and the subsequent price discovery once regular trading begins.

However, the stock’s rapid rise also means that its valuation has moved considerably higher within a very short period, making future price movements dependent on factors including earnings, business growth, market conditions and investor expectations.