Hero Motors, a key auto‑component firm under the Munjal family, has refiled its Draft Red Herring Prospectus (DRHP) with SEBI today, aiming to raise ₹1,200 crore via an initial public offering. The Hero Motors IPO comprises ₹800 crore in fresh equity and ₹400 crore in an offer-for-sale, targeting debt repayment and capacity expansion.
🧾 IPO Structure & Purpose
- Fresh Issue: Up to ₹800 crore in new shares.
- Offer-for-Sale: ₹400 crore worth of promoter shares (₹390 cr from O P Munjal Holdings and ₹5 cr each from Bhagyoday Investments & Hero Cycles).
- Utilization of Funds:
- ₹285 crore to repay or prepay debt.
- ₹237 crore for equipment purchase and capacity build-out at the Gautam Buddha Nagar (UP) plant.
- Remaining capital earmarked for acquisitions and general corporate purposes.
🏭 Company Snapshot
- Leadership: Headed by Pankaj Munjal, of the Hero MotoCorp founding family. Serves clients like BMW, Ducati, Harley‑Davidson, and Hummingbird EV.
- Global Footprint: Six manufacturing facilities across India, UK, and Thailand.
- FY24 Performance:
- Revenue: ₹1,064 crore (up ~16% from ₹914 crore in FY22).
- Profit after tax: ₹17 crore—a 67% drop YoY due to rising expenses.
- Gross margins: Improved from 30.8% to 39.4% over two years.
📅 Timeline & Key Features
- Previous Attempt: Filed initial IPO proposal for ₹900 crore in August 2024, later withdrawn in October.
- Book-Running: Managed by ICICI Securities, JM Financial, and DAM Capital Advisors; registrar is KFin Technologies. reuters
- Investor Allocation: Targeted distribution: 50% to QIBs, 15% to non-institutional investors, and 35% reserved for retail.
🔍 Strategic Rationale
- Debt Reduction: With ₹285 crore allocated to debt, the IPO aims to strengthen the balance sheet and improve financial flexibility.
- Capacity Build-Out: The expansion at the UP facility positions Hero Motors to capture future growth, including rising demand for EV powertrains.
- Growth via Acquisitions: The IPO is structured to allow funding for inorganic growth—highlighting broader strategic ambitions.
✅ Outlook & Market Impact
- Investor Sentiment: Given strong global OEM relationships and improved margins, the IPO could attract long-term institutional interest.
- Industrial Momentum: Expanding local manufacturing aligns with India’s auto component sector growth and EV push.
- Hero MotoCorp Linkage: Though separate from Hero MotoCorp, the shared promoter pedigree enhances trust and market positioning.
