Hero Motors, part of the Hero Motors Company (HMC) Group, is planning to raise ₹900 crore through an initial public offering (IPO) as per its draft red herring prospectus (DRHP) filed on August 23. The IPO will include a fresh equity issue of ₹500 crore and an offer-for-sale (OFS) worth ₹400 crore. OP Munjal Holdings, a promoter, intends to sell shares worth ₹250 crore, while Bhagyoday Investments and Hero Cycles will offload shares valued at ₹75 crore each through the OFS.
Hero Motors may also consider a pre-IPO placement of ₹100 crore, which would adjust the allocation for general corporate purposes from the fresh issue. OP Munjal Holdings holds a 71.55% stake in Hero Motors, while Bhagyoday Investments and Hero Cycles own 6.28% and 2.03%, respectively.
Hero Motors specialises in powertrain solutions, serving major global automotive original equipment manufacturers (OEMs). With six manufacturing facilities in India, the UK, and Thailand, the company provides both electric and non-electric powertrains, exporting to the US, Europe, and the ASEAN region.
Industry Outlook:
- From 2021 to 2023, the global two-wheeler market grew at a compound annual growth rate (CAGR) of 5.7%, reaching 15.88 million units in 2023. The rise in urbanisation and demand for fuel-efficient, affordable vehicles like scooters and motorcycles has boosted this growth.
- The premium motorcycle segment (>=125 cc) in India recorded a 3% CAGR between fiscal 2019 and 2024, increasing its market share from 38% to 52%.
- Despite a cut in subsidies, the demand for electric two-wheelers in India continued to grow in fiscal 2024, supported by new product launches.
HERO Motors Limited IPO Objectives
The company plans to allocate the net proceeds from the issuance to the following purposes:
- Part of the proceeds will be used to repay or pre-pay certain borrowings taken by the company.
- Allocate funds toward investment in new equipment for expanding its Gautam Buddha Nagar facility.
- Allocating funds to meet the working capital requirements of the company.
- The remaining funds will be allocated for general corporate purposes.
About HERO Motors Limited
Hero Motors Limited is a leading player in the automotive technology sector, known for its expertise in powertrain solutions. The company offers end-to-end services, from designing and prototyping to developing and delivering comprehensive powertrain systems. Its product portfolio covers electric and non-electric powertrains, catering to a wide range of applications, including two-wheelers, e-bikes, off-road vehicles, performance vehicles, and electric and hybrid cars.
Hero Motors operates globally, supplying powertrain systems to OEMs across the U.S., Europe, India, and the ASEAN region. The company stands out in the market for its innovations in continuously variable transmissions (CVT), electric vehicle (EV) transmissions, and integrated drive units.
Hero Motors was one of the first companies in India to capitalise on the global e-bike powertrain market, giving it a distinct advantage in the electric mobility sector. Through partnerships with major industry players such as BMW, Ducati, and Yamaha, Hero Motors has strengthened its position in the global market.
In recent years, Hero Motors has made strategic investments to enhance its capabilities. The acquisition of Hewland, a British company specialising in high-performance gearboxes and transmission systems, has expanded the company’s design and validation expertise. Additionally, the joint venture with Yamaha Motors Japan for manufacturing electric motors under the ‘HYM’ brand further strengthens its position in the EV segment.
Peer Details
The following are the listed companies in India engaged in a business similar to HERO Motors Limited:
- CIE Automotive India Limited
- Endurance Technologies Limited
- Sona BLW Precision Forgings Limited
- UNO Minda Limited
- Varroc Engineering Limited
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Contact Details of HERO Motors Limited IPO
- Registered office: Hero Nagar, GT Road, Ludhiana, Punjab –141 003, India
- Phone: +91 1204412000
- E-mail: investorrelations@heromotors.com
IPO Financials
| Particulars | Year ending on March 31, 2024Total Income | Year ending on March 31, 2023 |
|---|---|---|
| Revenue from Operation (in ₹ million) | 10,643.86 | 10,546.24 |
| Net worth (in ₹ million) | 3,854.44 | 3,44.69 |
| EBITDA (in ₹ million) | 828.08 | 973.51 |
| Profit / (loss) for the year(in ₹ million) | 170.35 | 405.06 |
| Earnings per Share (in ₹) | 0.36 | 1.13 |
| Total Borrowings (in ₹ million) | 3,039.98 | 2,696.10 |
| Return on Net Worth (RoNW) (%) | 4.42 | 11.76 |
| Return on Capital Employed (RoCE) (%) | 22.59 | 26.16 |
Know before investing
Strengths
6HERO Motors is a leading provider of diversified e-mobility solutions.
The company has a strong market presence in electric bikes and premium two-wheelers.
Longstanding relationships with top OEMs highlight HERO Motors' expertise.
Advanced infrastructure enables HERO Motors' cost-effective, precise manufacturing globally.
The company’s robust R&D capabilities foster innovation and long-term growth.
The company’s strategic expansion into new markets strengthens global positioning.
Risks
6HERO Motors faces revenue risks from overseas markets like Europe.
Adverse changes in the e-bike and two-wheeler sectors may hurt business.
HERO Motors depends on key suppliers without definitive agreements, risking delays.
Failure to meet strict customer performance standards may lead to recalls.
Losing key customers could significantly impact HERO Motors' financial stability.
Technological advancements in EVs may challenge HERO Motors' competitive edge.
