Hero Motors IPO: Hero Motors, a prominent auto-components company under the Hero Motors Company (HMC) Group, is gearing up to make its mark in the public market. With the backing of South Asia Growth Invest, the company has filed a draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) to raise ₹900 crore through an initial public offering (IPO), as revealed in the filing on August 23.
The DRHP, filed on August 23, outlines the IPO’s structure, which includes a fresh equity issuance of ₹500 crore and an offer-for-sale (OFS) of ₹400 crore worth of shares by the company’s promoters. Promoter OP Munjal Holdings intends to sell shares worth ₹250 crore through the OFS, while Bhagyoday Investments and Hero Cycles will each offload shares worth ₹75 crore.
Moreover, Hero Motors is considering a pre-IPO placement of ₹100 crore before submitting the Red Herring Prospectus with the Registrar of Companies (ROC). If this placement materializes, the proceeds will impact the allocation for general corporate purposes from the fresh issue, according to the report.
Currently, OP Munjal Holdings holds a 71.55% stake in Hero Motors on a fully diluted basis. Bhagyoday Investments and Hero Cycles own 6.28% and 2.03% stakes, respectively, while investor South Asia Growth Invest LLC has a 12.27% shareholding in the company.
Hero Motors is a key player in providing powertrain solutions, catering to automotive OEMs in the United States, Europe, India, and the ASEAN region. The company serves a wide range of clients in the automotive sector, including makers of two-wheelers, e-bikes, off-road vehicles, electric and hybrid cars, heavy-duty vehicles, and eVTOL aircraft.
With a global clientele that includes brands like BMW AG, Ducati Motor Holding SPA, and HWA AG, Hero Motors is recognized for its contribution to the automotive industry. The company also supplies leading e-bike manufacturers with innovative solutions.
Owned by Pankaj Munjal, Hero Motors stands out as the only Indian company producing and exporting CVT hubs for global e-bike OEMs. Additionally, it leads as the sole manufacturer of integrated electric powertrain products for e-bikes in India, operating across powertrain solutions and alloys and metallics segments in six manufacturing facilities across India, the UK, and Thailand.
Hero Motors Financials
For the fiscal year ending March 2024, Hero Motors reported a net profit of ₹17 crore, marking a notable 58% decrease from the previous year’s profit of ₹40.5 crore. This decline was attributed to various factors like revenue growth, operational performance, and employee costs. The company’s revenue for the year amounted to ₹1,064.4 crore, showing a modest 0.9% increase from the previous year’s ₹1,054.6 crore. Despite lower input costs, EBITDA dropped by 23.7% to ₹63.8 crore, with margins shrinking by 190 basis points to 6%.
