Hero Motors files DRHP for Rs 900-crore IPO

Auto component maker Hero Motors Ltd has filed a draft red herring prospectus (DRHP) for its initial public offering (IPO). The Noida-based company plans to raise Rs 500 crore through a fresh issue of shares, while its promoter and promoter groups eye Rs 400 crore through the offer-for-sale component.

Hero Motors provides integrated powertrain systems, offering solutions for designing, prototyping, validating, developing, and delivering system-level powertrain solutions for electric and non-electric vehicles. Its offerings include motor and electric drive units for e-bikes.

Promoter OP Munjal Holdings, which holds a 72% stake in the company, will sell his shares worth up to Rs 250 crore, while promoter group Hero Cycles and Bhagyoday Investments will sell shares worth up to Rs 75 crore each.

Pankaj Munjal is also a promoter and chairman of Hero Motors with a 2.5% stake. Other investors include South Asia Growth Invest LLC with a 12.3% stake. The company noted that its promoters - O P Munjal Holdings, Pankaj Munjal, Charu Munjal and Abhishek Munjal - hold 284,172,126 equity Shares, representing a 74.5% stake.

The company will primarily use the net proceeds of Rs 500 crore from the fresh issue to repay debt and equipment required for capacity expansion at its Noida facility.

Hero Motors recorded a net profit of Rs 17 crore in the financial year 2024, down from Rs 40.5 crore in 2023. The company’s revenue from operations was Rs 1,064.4 crore, slightly higher than Rs 1,054.62 crore in the year-ago period. Its total cash and cash equivalent in 2023-24 was Rs 42.3 crore.

Some of its customers include Hero MotoCorp, Escorts Kubota, Ducatti and Hummingbird. The company has six manufacturing facilities and two technology centers across India, UK, and Thailand.

Hero MotoCorp has a joint venture, HYM Drive Systems Pvt Ltd, with Yamaha Motor and has recently bought Spur Technologies Pvt Ltd, which makes alloys and metallics components.