Hero Motors is pursuing potential acquisitions in the technology sector as part of its preparations for the upcoming initial public offering (IPO), which will bolster its engineering expertise and global reach. The automotive components manufacturer has not yet secured any deals but is actively assessing opportunities in India and the UK, with a focus on targets that can enhance its research and development capabilities.
The company’s management has indicated that these inorganic investments could serve multiple strategic purposes, including adding new technologies, expanding into additional markets, and accessing a broader customer base. The IPO, scheduled for September 16–18, will generate up to ₹1,000 crore, with ₹600 crore coming from a new share issuance and ₹400 crore from existing promoter sales by O P Munjal Holdings and Hero Cycles.
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The funds raised will be allocated toward debt repayment (₹190 crore), equipment upgrades (₹200 crore), and strategic investments, including acquisitions, though these will not exceed 25% of the fresh issue proceeds. The company has a track record of using acquisitions to enhance its technological capabilities and product range. Notable past moves include acquiring a 32% stake in Hewland Engineering—later increasing its ownership to majority control—and purchasing Spur Technologies in FY24, a supplier of components for premium motorcycles and electric bikes. These acquisitions have historically allowed Hero Motors to enter new markets and strengthen its research and development, aligning with its long-term strategy of selective inorganic growth.
Reducing customer concentration remains a strategic goal. While the largest customer’s revenue share declined from 38.80% in FY25 to 35.57% in FY26, the top five and top ten clients still represent 61.42% and 72.89% of total revenue, respectively. The share of the top five customers also fell from 63.39% in FY25, while the top ten’s share dropped from 78.03% in the same period. Management expects this dependency to lessen as recently secured programmes move toward higher production volumes, further diversifying the revenue mix.
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International expansion continues to drive revenue growth, with overseas sales accounting for 41.36% of total revenue in FY26, a slight increase from 40.94% the previous year. The company supplied products and services across 23 countries during FY26, with international customers generating ₹491.53 crore in revenue. The Powertrain Solutions division has been a key driver of export growth, contributing significantly to the company’s global footprint. The red herring prospectus outlines that any acquisitions will target technologies that align with existing operations, though no formal agreements have been finalized. The company’s selective approach ensures that investments will complement its core business while mitigating risks associated with unrelated ventures.
The IPO’s share price range is set between ₹79, 84 per share. Of the fresh issue proceeds, ₹190 crore will reduce outstanding debt, while ₹200 crore will fund capacity expansions at its Gautam Buddha Nagar facility in Uttar Pradesh. The remainder will support acquisitions, partnerships, and operational needs. The Gautam Buddha Nagar facility, a major manufacturing hub, will benefit from the equipment upgrades, enabling higher production volumes and improved efficiency.
