Hero Motors IPO: Increases Issue Size to ₹1,200 Crore in Revised DRHP

Hero Motors, a manufacturer of auto components, is led by Pankaj Munjal, who is the first cousin of Pawan Munjal, the chairman of Hero MotoCorp. Hero Motors has once again approached the Securities and Exchange Board of India (SEBI) with a revised draft red herring prospectus (DRHP) for its initial public offering (IPO). 

This time, the proposed issue size has been enhanced to ₹1,200 crore from the previously planned ₹900 crore, signalling the company’s evolving fundraising goals and capital allocation strategy.

Hero Motors IPO: Revised Size and Offer Structure

As per the refiled DRHP, the Hero Motors IPO will comprise a fresh issue of equity shares worth up to ₹800 crore and an offer for sale (OFS) aggregating up to ₹400 crore. The OFS portion involves a sale of ₹390 crore worth of shares by OP Munjal Holdings and ₹5 crore each by Bhagyoday Investments and Hero Cycles.

The face value of each equity share is ₹10, and the offering is expected to provide liquidity to the selling shareholders while raising fresh capital for business needs.

Reservation of Shares for Investor Categories

According to the draft document, the IPO will allocate not more than 50% of the issue size to qualified institutional buyers (QIBs). At least 15% will be reserved for non-institutional investors (NIIs), and 35% of the shares will be made available for retail individual investors. This structure aims to maintain a balanced distribution across investor categories.

Key Details of Hero Motors IPO Management

Kfin Technologies has been appointed as the registrar for the IPO. ICICI Securities, DAM Capital Advisors, and JM Financial are acting as the book-running lead managers. These entities will oversee the process, coordinate investor participation, and ensure smooth execution of the public issue.

Objectives for Raising Funds

Hero Motors intends to allocate ₹285 crore from the fresh issue proceeds towards repayment or prepayment of certain outstanding borrowings. A sum of ₹237 crore will be utilised for purchasing equipment aimed at expanding the company’s manufacturing capacity in Gautam Buddha Nagar, Uttar Pradesh.

The remaining proceeds will support inorganic growth opportunities through future acquisitions and strategic initiatives. A portion of the funds will also be reserved for general corporate purposes.

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Hero Motors IPO: Background and Previous Filing

In August of the previous year, Hero Motors had initially filed for an IPO worth ₹900 crore. The latest refiling, with an increased target of ₹1,200 crore, reflects a broader vision for capital deployment and business development.

Conclusion

The refiled DRHP indicates Hero Motors’ readiness to tap the capital market with a strengthened offer. The enhanced issue size and clear allocation of proceeds suggest a well-structured plan to reduce debt, expand manufacturing capabilities, and explore future strategic growth avenues. 

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