Hero Motors, a key player in the auto-components sector under the Hero Motors Company (HMC) Group, has taken a pivotal step toward going public. On August 23, the company submitted its draft red herring prospectus (DRHP) to the Securities and Exchange Board of India (SEBI), marking the beginning of its initial public offering (IPO) process. The IPO aims to raise ₹900 crore, comprising a fresh equity issuance of ₹500 crore and an offer-for-sale (OFS) of ₹400 crore by the company’s promoters.
Promoter OP Munjal Holdings plans to sell ₹250 crore worth of shares through the OFS, while Bhagyoday Investments and Hero Cycles will each offer shares worth ₹75 crore. Additionally, Hero Motors may pursue a pre-IPO placement of ₹100 crore, which, if executed, would adjust the allocation for general corporate purposes from the fresh issue.
Currently, OP Munjal Holdings holds a 71.55% stake in Hero Motors on a fully diluted basis, with Bhagyoday Investments and Hero Cycles owning 6.28% and 2.03%, respectively. South Asia Growth Invest LLC, a key investor, holds a 12.27% share in the company.
Hero Motors, a leader in powertrain solutions, serves global automotive OEMs with both electric and non-electric powertrains. Its client base includes prominent names like BMW AG, Ducati Motor Holding SPA, and Enviolo International Inc., among others. The company operates in diverse segments, including powertrain solutions and alloys and metallics, with manufacturing facilities in India, the UK, and Thailand.
Financially, Hero Motors reported a net profit of ₹17 crore for the fiscal year ending March 2024, a sharp 58% decline from the previous year’s ₹40.5 crore. The decrease is attributed to subdued revenue growth, lower operational performance, and increased employee costs. The company’s revenue for the year was ₹1,064.4 crore, a slight 0.9% increase from ₹1,054.6 crore in the previous year. EBITDA fell by 23.7% to ₹63.8 crore, with margins shrinking to 6% despite lower input costs.
As Hero Motors prepares for its IPO, it aims to leverage its strong market position and global client base to attract investors and support its growth strategy.
