This move comes five years after its acquisition of UK-based Hewland Engineering and aims to enhance the company’s capacity and market reach.
Five years after acquiring a strategic stake in UK-based transmission specialist Hewland Engineering and three years after buying Spur Technologies, Hero Motors Ltd is back on the acquisition trail, with up to ₹150 crore from its proposed ₹1,000-crore IPO available for acquisitions and other strategic initiatives.
The Pankaj Munjal-led automotive technology company is considering opportunities in controllers, aviation powertrains and high-end machining, as well as businesses that could bring established global customers. Management said acquisition proposals were already being discussed at the board level.
Industry sources said a transaction could be announced after the IPO and before the end of 2026. Hero Motors has neither identified a target nor disclosed the likely size of an individual deal.
Speaking to businessline after the IPO roadshow, Chairman Pankaj Munjal and Managing Director and CEO Amit Gupta declined to identify potential targets or commit to a timeline. Gupta, however, confirmed that proposals were coming in.
“We are discussing at a board level… where should we move,” Gupta said.
Fresh issue
Hero Motors’ ₹1,000-crore IPO comprises a ₹600-crore fresh issue and a ₹400-crore offer for sale. Of the fresh proceeds, ₹190 crore will go towards debt repayment and ₹200 crore towards equipment to expand powertrain capacity at Gautam Buddha Nagar.
The balance can fund what Hero Motors describes in its RHP as “inorganic growth through unidentified acquisitions and other strategic initiatives”, alongside general corporate purposes.
Spending specifically on acquisitions and other strategic initiatives is capped at 25 per cent of the fresh issue, or ₹150 crore. Combined spending on these initiatives and general corporate purposes cannot exceed 35 per cent, or ₹210 crore.
Electric-drive systems
Gupta offered a clearer indication of where Hero Motors could shop. As the company develops complete electric-drive systems, it still sources components including controllers and batteries externally, opening potential acquisition opportunities where Indian suppliers lack capabilities needed for global markets.
“Maybe the powertrain for aviation is one,” Gupta said, also pointing to high-end machining facilities serving global markets.
Hero Motors could also buy businesses with customers and orders already in place. Gupta said some global customers are tied to one or two tier-1 suppliers, creating opportunities to acquire businesses where “the customers and the business is already in place” and take them to the next level. Geography and additional R&D capabilities could also influence its choice of target.
The acquisition push follows Hero Motors’ investment in Hewland Engineering in 2021 and its 100 per cent acquisition of Spur Technologies from Hero Cycles in November 2023.
The company is now pursuing a two-track expansion: investing ₹200 crore to build powertrain capacity organically while keeping up to ₹150 crore available to acquire technology, customers and market access that could take longer to build from scratch.