Hero Motors ups IPO size to ₹1,200 crore
What's the story
Hero Motors, a leading auto components manufacturer, has refiled its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI). The company has increased the size of its initial public offering (IPO) from ₹900 crore to ₹1,200 crore. The revised plan includes a fresh share issue worth up to ₹800 crore and an offer for sale by existing shareholders worth up to ₹400 crore.
Fund allocation
IPO proceeds to reduce debt, expand facility in UP
The proceeds from the IPO will be utilized to reduce debt and fund the purchase of equipment for expanding Hero Motors' facility in Uttar Pradesh. The company had first filed papers for a ₹900 crore IPO in August last year. As of now, promoters hold a 91.65% stake in the company which manufactures engine and transmission components for two-wheelers.
Business profile
Global clientele includes BMW, Ducati, and Harley-Davidson
Hero Motors has a global clientele that includes noted brands such as BMW, Ducati, and Harley-Davidson. In the fiscal year 2024 (FY24), the company derived 49% of its revenue from powertrain solutions and the remaining 51% from alloys and metallics (A&M) business segment. Geographically, about 59% of FY24 revenue came from India, while Europe and the US contributed to 29% and around 8%, respectively.
Financial performance
Revenue from operations increased at a CAGR of 22%
Hero Motors has seen a steady growth in its revenue from operations, which increased from ₹914.2 crore in FY22 to ₹1,064.4 crore in FY24. The company's gross profit also rose from ₹281.4 crore in FY22 to ₹419.4 crore in FY24, at a CAGR of 22%. This was reflected by an improvement in gross margins from 30.78% in FY22 to 39.4% in FY24.