Hero Motors IPO Day 3: Issue subscribed 5.5x; NII, retail drive demand as QIB quota lags

The ₹1,000 crore initial public offering (IPO) of Hero Motors was subscribed 5.47 times on the final day of bidding, receiving bids for 48.46 crore equity shares against 8.86 crore shares on offer, according to exchange data. The issue received strong demand from non-institutional investors (NIIs) and retail investors, but lacked support from qualified institutional buyers (QIBs).

The non-institutional investor (NII) portion was subscribed 7.66 times, with bids for 14.55 crore shares against 1.90 crore shares reserved for the category. Within the NII segment, bids in the ₹2 lakh-₹10 lakh category were 11.09 times the shares on offer, while the portion for bids above ₹10 lakh was subscribed 5.95 times.

The retail portion was subscribed 7.33 times, receiving bids for 32.47 crore shares against 4.43 crore shares reserved for the category. Of the total retail bids, 28.96 crore shares were made at the cut-off price, while 3.51 crore shares were price bids.

The qualified institutional buyer (QIB) portion was subscribed 0.57 times, with bids for 1.44 crore shares against 2.53 crore shares on offer. Mutual funds accounted for 1.19 crore of the QIB bids, followed by foreign institutional investors with 12.04 lakh shares and other investors with 12.87 lakh shares.

As per the IPO papers filed with Sebi, 50% of the offer has been reserved for QIBs, 35% for retail investors and the remaining 15% for NIIs.

IPO GMP drops to ₹3

Hero Motors IPO’s grey market premium (GMP) stood at ₹3 on September 18, indicating an estimated listing price of ₹87 against the upper price band of ₹84. This translates into a potential listing gain of around 3.57%. The unofficial premium has declined from a high of ₹24 over the past nine sessions.

The Hero Motors IPO comprises a fresh issue of up to ₹600 crore and an offer-for-sale (OFS) of equity shares worth up to ₹400 crore by promoters O P Munjal Holdings and Hero Cycles.

Of the fresh issue proceeds, Hero Motors plans to use ₹190 crore towards repayment, prepayment or redemption of certain outstanding borrowings. As of March 31, 2026, the company had total borrowings of ₹400.79 crore, compared with ₹407.62 crore a year earlier.

Another ₹200 crore has been earmarked for capital expenditure through the purchase of equipment for capacity expansion at its Gautam Buddha Nagar facility in Uttar Pradesh. The company also plans to use the proceeds for inorganic growth through unidentified acquisitions and other strategic initiatives, along with general corporate purposes.

Ahead of the IPO opening, the company raised ₹300 crore from anchor investors by allotting 3.57 crore equity shares at ₹84 apiece, the upper end of the IPO price band of ₹79-84 per share.

Hero Motors designs, develops, manufactures and supplies engineered powertrain solutions to automotive original equipment manufacturers (OEMs) across the US, Europe, India and the ASEAN region. Its offerings cover design, prototyping, validation, development and delivery of system-level and component-level solutions for electric and non-electric powertrains.

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