Hero Motors, an auto components manufacturer led by Pankaj Munjal, who is a cousin of Hero MotoCorp’s chairman Pawan Munjal, has filed a Draft Red Herring Prospectus (DRHP) to raise ₹900 crore through an Initial Public Offering (IPO).
The IPO will include a fresh issue of up to ₹500 crore, with the remaining ₹400 crore coming from an offer for sale (OFS) by the promoters, OP Munjal Holdings, Bhagyoday Investments, and Hero Cycles.
Hero Motors plans to use the money from the fresh issue to pay off outstanding loans, invest in equipment to expand its Noida facility, meet working capital needs, and cover general corporate expenses.
The company might also consider a pre-IPO placement of ₹100 crore before filing the Red Herring Prospectus. If this happens, the amount raised will reduce the portion of the fresh issue allocated for general corporate purposes.
Currently, the promoters own 91.65% of Hero Motors. The company specializes in manufacturing engine and transmission components for two-wheelers, with a global client list that includes brands like BMW, Ducati, and Harley Davidson.
In the financial year 2024, 49% of Hero Motors’ revenue came from powertrain solutions, while 51% came from the alloys and metallics (A&M) business segment. Geographically, 59% of its revenue came from India, 29% from Europe, and about 8% from the U.S.
Hero Motors’ revenue from operations grew from ₹914.2 crore in FY22 to ₹1,064.4 crore in FY24. Additionally, its gross profit increased from ₹281.4 crore in FY22 to ₹419.4 crore in FY24, with the gross margin improving from 30.78% to 39.40% during the same period.
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