Hero Motors IPO News: According to the draft prospectus, the company will issue new shares worth up to ₹800 crore, while existing shareholders will sell shares worth up to ₹400 crore through an offer for sale.
Hero Motors, a well-known auto parts manufacturer, has filed a Draft Red Herring Prospectus (DRHP) with SEBI for an IPO of ₹1,200 crore. This IPO will include new shares worth up to ₹800 crore (fresh issue) and shares worth up to ₹400 crore as an offer for sale (OFS). In total, the company plans to raise up to ₹1,200 crore from the capital market.
Use of Funds Raised from the IPO
According to the draft documents, the company will primarily use the money raised from the IPO for two purposes. First, to reduce existing debt, and second, to expand its plant located in Uttar Pradesh by acquiring new equipment and setting up manufacturing units. Through this decision, the company aims to increase its production capacity and strengthen its balance sheet.
Financial Condition and Performance of the Company
Hero Motors' profits saw a significant decline in fiscal year 2024. While the company's consolidated net profit was ₹4862.25 crore in FY23, it fell to only ₹1896.99 crore in FY24. This means the company's profit decreased by approximately 67 percent. Despite this, the company's total income, i.e., revenue, showed a slight increase of about 1 percent. The increase in costs is considered the main reason behind this decline.
Who are the Lead Managers?
The responsibility of successfully executing Hero Motors' IPO has been assigned to three major companies. ICICI Securities, JM Financial, and DAM Capital will be the book running lead managers for this issue. These institutions will handle essential tasks such as IPO pricing, marketing, and distribution.
Hero Motors' Business Model
Hero Motors is a leading auto component manufacturing company in the automobile sector. It is led by Pankaj Munjal, who is the cousin of Pawan Munjal, Chairman of Hero MotoCorp. The company's main focus is on providing powertrain solutions, including both electric and non-electric options. Hero Motors serves automotive original equipment manufacturers (OEMs) in the United States, Europe, and India.
BMW and Other Major Companies are Customers
Hero Motors has a b customer portfolio. It includes several major brands, including the German auto giant BMW. The company also specializes in manufacturing engines and gear systems, besides electric drive trains. Its b engineering and innovation capabilities make it competitive in the global market.
Expansion Plans in India
Through the funds raised from the IPO, Hero Motors is going to expand its manufacturing unit located in Uttar Pradesh. For this, the company will invest in the purchase of new machines and increasing production capacity. With this expansion, the company wants to strengthen its hold in the domestic as well as the international market.
A Major Step in Hero Group's Planning
Hero Motors' IPO is coming at a time when the auto sector is gradually gaining momentum and investor interest in auto parts companies has increased. The company believes that it can benefit greatly in the future due to the rapidly growing steps towards electric mobility. Also, the demand from European markets is strengthening its business.
Market's Eyes on Hero Motors
This step by Hero Motors is also considered quite important for the stock market. Market experts are keeping an eye on this IPO because, considering the company's profile and business model, it can generate investor interest. Earlier, the IPOs of several auto parts sector companies have received good responses, and similar expectations are being made from Hero Motors as well.
