Hero Motors refiles DRHP with Sebi to launch Rs 1,200 crore IPO

Hero Motors, a South Asia Growth Invest-backed company, has refiled its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) to raise Rs 1,200 crore through an initial public offering (IPO). The IPO includes a fresh issue of up to Rs 800 crore and an offer for sale (OFS) of up to Rs 400 crore by the promoters, featuring shares from O P Munjal Holdings and others.

The proceeds from the fresh issue will be allocated towards various objectives, including Rs 285 crore for debt repayment, Rs 237 crore for capital expenditures at its Uttar Pradesh facility, funding for acquisitions, and general corporate purposes. The company may also explore a pre-IPO placement of Rs 160 crore.

The offering will be carried out through the book-building process, with not more than 50% allocated to qualified institutional buyers. Non-institutional bidders and retail investors will receive 15% and 35%, respectively. This strategic allocation is designed to ensure a balanced participation from diverse investor groups, thereby enhancing the robustness of the IPO process.

Hero Motors is a leading automotive technology company in India. According to a CRISIL Report, it is "engaged in designing, developing, manufacturing and supplying highly engineered powertrain solutions catering to automotive original equipment manufacturers (OEMs) in United States, Europe, India and the Association of Southeast Asian Nations (ASEAN) region." The company offers solutions across both electric and non-electric powertrains, making it a versatile player in the automotive industry.

The company has organised its operations into two segments: Powertrain Solutions and Alloys and Metallics (A&M). It provides comprehensive solutions for powertrain systems and components, catering to a diverse range of applications, including two-wheelers, e-bikes, and hybrid vehicles. This strategic segmentation allows Hero Motors to focus on specialized markets, enhancing its capability to deliver targeted solutions.

Hero Motors has capitalised on the global e-bike powertrain opportunity, as noted in the CRISIL Report: "It is among the first companies in India to capitalize on the global e-bike powertrain opportunity and have a distinct first mover advantage in this industry. It is the only player manufacturing and exporting CVT hubs to global e-bike OEMs from India, and are the only manufacturer of integrated electric powertrain products for e-bikes in India." This pioneering approach has positioned Hero Motors as a leader in the e-bike segment.

The company's manufacturing facilities are strategically located across India, the United Kingdom, and Thailand, ensuring proximity to customers and competitive costs. It also holds a strategic stake in Hewland, a British company, and has formed a joint venture with Yamaha Motors Japan for electric motors. These strategic alliances and geographic placements enhance Hero Motors' operational efficiency and market reach.

Financially, Hero Motors' revenue from operations grew from Rs 914.19 crore in Fiscal 2022 to Rs 1,064.39 crore in Fiscal 2024. The gross profit increased from Rs 281.38 crore to Rs 419.37 crore over the same period, reflecting a robust financial trajectory.

The company's profit after tax for Fiscal 2024 was Rs 17.04 crore, with Rs 22.39 crore recorded in the nine months ending December 31, 2024. This demonstrates a growing financial strength in its operations, showcasing its ability to generate sustainable profits.

ICICI Securities Limited, DAM Capital Advisors Limited, and JM Financial Limited are acting as the book-running lead managers for the IPO, with KFin Technologies Limited serving as the registrar. These experienced financial institutions are expected to guide the IPO process efficiently, ensuring compliance and maximizing investor confidence.