Hero Motors Files DRHP For ₹900 Crore IPO: Fresh Issue And OFS Breakdown

Hero Motors Company (HMC) Group is gearing up for its next big move - an Initial Public Offering (IPO) that is set to raise Rs 900 crore. With South Asia Growth Invest backing the flagship auto-components company, Hero Motors has filed its draft red herring prospectus (DRHP) with the market regulator Securities and Exchange Board of India (SEBI) to raise Rs 900 crore through an initial public offering (IPO).

IPO Details

The Rs 900 crore IPO is split into two parts, that is, a fresh issue of Rs 500 crore and an offer for sale (OFS) worth Rs 400 crore by existing promoters.

Among the major contributors to the OFS are O P Munjal Holdings (Rs 250 crore) and Bhagyoday Investments and Hero Cycles (Rs 75 crore each). Interestingly, the company is also exploring a pre-IPO placement of up to Rs 100 crore, which, if executed, would reduce the fresh issue size.

Fund utilisation

The company plans to use Rs 200.1 crore from the fresh issue to repay or prepay some of its borrowings. An additional Rs 124 crore will be used for expanding its manufacturing facility in Gautam Buddha Nagar, Uttar Pradesh, focusing on purchasing advanced equipment.

The rest will be allocated for general corporate purposes, strengthening its operational base.

About the company

The company’s product range caters to various vehicle categories, including electric and non-electric powertrains for two-wheelers, e-bikes, electric and hybrid cars, and even heavy-duty vehicles. This diverse portfolio has enabled Hero Motors to serve prominent global clients like BMW, Ducati, and Formula Motorsport.

With six manufacturing facilities across India, the UK, and Thailand, Hero Motors has established itself as a global player.

The company’s international presence was further strengthened by acquiring a strategic stake in the British firm Hewland in 2022.

Prior to this, Hero Motors joined forces with Yamaha Motors Japan in 2021 to create the ‘HYM’ brand, focused on manufacturing electric motors.

Book-running lead managers

ICICI Securities Limited, DAM Capital Advisors Limited, and JM Financial Limited are the book-running lead managers