Hero Motors IPO filed DRHP with SEBI for IPO worth ₹900 crores

India’s leading two-wheeler manufacturer, Hero Motors is planning for ₹900 crore IPO and has submitted draft papers with market regulator SEBI (Securities and Exchange Board of India). According to the DRHP, the IPO is a mixture of a fresh issue as well as an offer-for-sale. In a fresh issue, it contains shares up to ₹500 crore, and in OFS it contains shares up to ₹400. The face value per share is ₹10.

In OFS promoter O P Munjal Holdings is selling shares worth ₹250 crores while Promoter group Hero Cycles Limited and Bhagyoday Investments Private Limited are selling shares worth ₹75 crores each. JM Financial Limited, DAM Capital Advisors Limited, and ICICI Securities Limited are the book-running lead managers(BRLM) of this offering and KFin Technologies Limited is the Registrar for it.

Before filing RHP, the company is planning for a pre-IPO placement of ₹100 crores if such a placement is completed the amount will be decreased from the general corporate purpose portion of the fresh issue. The fund raised from the fresh issue will be utilized for the working capital demand of the company, for general corporate uses, for the purchase of equipment needed to expand the capacity of the company’s Gautam Buddha Nagar, Uttar Pradesh facility and for repayment or prepayment of specific remaining loans of the company.

The company’s revenue for the year was ₹1,064.4 crore or 0.9% more than that for the previous year at ₹1,054.6 crore. In contrast, EBITDA (earnings before interest, tax depreciation, and amortization) dropped 23.7% to reach only ₹63.8 crore while its margins decreased by 190 basis points to 6% despite lower raw material prices.

The company provides services to its global customers like Ducati, BMW, Hummingbird EV, Formula Motorsport, HWA, Enviolo, and leading e-bike manufacturers.

The company experienced a net profit of ₹17 crore during the financial year ending March 2024, which was down by 58% from that reported last year of ₹40.5 crore. The reasons behind this are poor operational performance, reduced growth revenue, and a rise in workers’ expenses.

In 2023-24, the company’s total income increased to ₹2,652.89 crore from ₹2,575.52 crore in FY23 and ₹2,120.89 crore in FY22, indicating continued growth. The loss for the year was ₹255.87 crore, down from ₹428.13 crore in the previous year, but still higher than the ₹91.39 crore loss in FY22.

Hero Motors is India’s leading automotive technology company that designs, develops, manufactures, and supplies highly engineered powertrain solutions for OEMs in the US, Europe, India, and the ASEAN region. It provides all-inclusive services for both electrical and non-electrical powertrains meeting the needs of different classes like two-wheeled vehicles, e-bikes, racing cars, electrically or hybridized automobiles; off-road machines apart from heavy-duty ones.

Hero Motors IPO Prospectus:

Hero Motors Company Financial Report

Amount ₹ in Crores

Hero Motors IPO Valuation – FY2024

Hero Motors IPO valuations detail like Earning Per Share (EPS), Price/Earning P/E Ratio, Return on Net Worth (RoNW), and Net Asset Value (NAV) details.

Peer Group Comparison

Objects of the Issue

• Repayment/prepayment, in full or in part, of certain outstanding borrowings availed by our Company
• Capital expenditure of our Company through purchase of equipment required for expansion in capacity of our Gautam Buddha Nagar, Uttar Pradesh facility
• Funding working capital requirements of our Company
• General corporate purposes

IPO Lead Managers aka Merchant Bankers

• ICICI Securities Limited
• DAM Capital Advisors Limited
• JM Financial Limited