Hero Motors IPO

About Hero Motors IPO

The IPO of Hero Motors comprises a fresh issue and an offer for sale. The fresh issue aggregates up to ₹800 crores while the offer for sale aggregates up to ₹400 crores. The total offer size is pegged at ₹1200 crores. It’s a 100% book-built issue. The price band is TBA. The IPO opens on TBA and closes on TBA.

The listing date is on TBA and the allotment date is TBA. The credit of shares to the Demat account will take place on TBA, while the initiation of refund will take place on TBA.

Hero Motors is one of India’s leading automotive technology companies engaged in designing, developing, manufacturing and supplying highly engineered powertrain solutions catering to automotive original equipment manufacturers (OEMs) in the United States, Europe, India and the Association of Southeast Asian Nations (ASEAN) region.

Objectives of Hero Motors IPO

The company proposes to utilise the IPO proceeds for:

• Repayment/prepayment, in full or in part, of certain outstanding borrowings availed
  
• Capital expenditure through purchase of equipment required for expansion in capacity of its Gautam Buddha Nagar, Uttar Pradesh facility
  
• Funding inorganic growth through unidentified acquisitions and other strategic initiatives and general corporate purposes
  

Industry Outlook

The global passenger car market by transmission type is poised for a shift between 2024 and 2029. Automatic transmissions, particularly torque converters, are expected to hold strong due to their comfort. ATs are expected to witness a CAGR of 3% to 5% between 2024-2029 and reach 13 million to 15 million units by 2029.

The global passenger car market by powertrain type is poised for a dramatic shift between 2024 and 2029. ICE vehicles, which were a significant player initially, will face increasing pressure from cleaner alternatives, particularly BEVs. BEVs are expected to log a CAGR of 29% to 31% to reach approximately 12 million to 14 million units by 2029.

Rising fuel costs, stricter emission regulations, and advancement in battery technology will incentivise consumers to move towards BEVs. Government support for BEVs and investment in charging infrastructure will further accelerate this transition.

Anticipated improvement in economic growth, push from OEMs with India as the base for exports of certain models is projected to boost exports resulting in 6% to 8% growth in fiscal 2025. Indian OEM continued to export a higher number of small cars with 5 out 10 top exported models being small cars. Affordable prices along with higher fuel efficiency has led to increased demand for small cars especially from emerging markets in Latin America and Africa.

Company Information

Hero Motors is one of India’s leading automotive technology companies engaged in designing, developing, manufacturing and supplying highly engineered powertrain solutions catering to automotive original equipment manufacturers (OEMs) in the United States, Europe, India and the Association of Southeast Asian Nations (ASEAN) region.

It’s a fully integrated powertrain systems provider offering comprehensive solutions including services for designing, prototyping, validating, developing, and delivering system-level and component-level powertrain solutions for both electric as well as non-electric powertrains.

Strengths of Hero Motors IPO

• Among India’s leading solutions provider to global e-mobility industry backed by diversified product and service offerings
• Growing market presence in the electric bikes and premium two-wheelers segments
• Longstanding relationships with premier global original equipment manufacturers and expertise in delivering solutions
• Advanced infrastructure with geographically diverse operations
• Strong research and development capabilities and long-term partnerships
• Legacy of diverse growth, experienced management team and strong corporate governance

Risks of Hero Motors IPO

• Adverse events affecting jurisdictions outside India, particularly Europe, could have an adverse impact on revenue from operations
• Adverse changes in the conditions affecting e-bikes and two-wheeler industries can adversely impact business
• Interruptions in the supply of raw materials could adversely affect business
• Failure to comply with performance requirements may lead to recalls or warranty liability claims
• Loss of any top 10 customers could have a material adverse effect on business
• Inability to anticipate and respond swiftly to customer demands could adversely impact financial performance
• Inability to compete effectively in global powertrain solutions could have a material impact on business and financial condition
• Inability to maintain and protect brand and business reputation could adversely affect business, prospects and financial performance
• Shutdown of existing technology centres and manufacturing facilities or future technology centres and manufacturing facilities could adversely affect business
• Inability to successfully implement strategies expanding into other market segments and geographies could adversely affect business

Anchor Investor Bidding Date TBA

IPO Registrar and Book Running Lead Managers

KFin Technologies is the registrar of Hero Motors IPO. The book running lead managers are:

• ICICI Securities
• DAM Capital Advisors
• JM Financial

Business Model

The operations of Hero Motors are organised into:

• Powertrain solutions
  
• Alloys and metallics
  

The company’s powertrain solutions segment is operated as two sub-units based on end applications served, namely:

• Gears and transmissions, serving a wide range of automotive and other mobility applications
  
• Bike powertrain, focused on the applications for the micro-mobility sector
  

Its A&M segment is engaged in providing sheet metal and tubular assemblies and component solutions, primarily to automotive OEMs.

Company Growth Trajectory

The revenue from operations of Hero Motors grew from ₹914.191 crores in fiscal 2022 to ₹1064.386 crores in fiscal 2024. Further, its gross profit increased from ₹281.383 crores in fiscal 2022 to ₹419.370 crores in fiscal 2024. The company’s gross margin increased from 30.78% in fiscal 2022 to 39.40% in fiscal 2024.

Advanced infrastructure with geographically diverse operations and longstanding relationships with premier global original equipment manufacturers have helped the company grow over the years.

Market Position

The operational strength of Hero Motors extends worldwide as it strategically establishes manufacturing and assembly facilities to meet diverse market and customer demands. It believes that strategic geographic dispersion of its G&T facilities across India, the United Kingdom, and Thailand allows it to be in close proximity to its customers and offer cost competitive solutions.

How to Check Allotment Status of Hero Motors IPO?

1. Visit the Registrar’s Website

• Visit the official website of KFin Technologies
• Click on ‘IPO Allotment Status’ from ‘Investors’ under ‘Products’
• Click on any one of the appearing links
• Choose IPO name and enter either your application number, Demat account or PAN number
• Enter captcha and click on ‘Submit’ to know the status
• Click on ‘Search’ to know the status

2. Check on the National Stock Exchange Website

The National Stock Exchange (NSE) has an IPO bid verification module. You can use it to check the status of Hero Motors. Go to the NSE website and find the ‘Invest’ tab. Click on ‘Verify IPO Bids’ under 'Resources & Tools'.

On the NSE IPO bid verification page, enter:

• Company name from dropdown
• Application number
• PAN

Then click ‘Submit’ to know the allotment status.

3. Check on the BSE Website

The Bombay Stock Exchange (BSE) also has an IPO allotment status page. Go to the BSE website and find the ‘Investors’ tab. Under ‘Investors’, click on ‘IPO’. This will take you to the IPO allotment status page. On the BSE IPO page, follow these steps:

• Select ‘Equity’ from the dropdown menu
• Choose ‘Hero Motors’ in the next dropdown
• Enter your application number
• Enter your PAN
• Click ‘Search’ to know allotment status

How to Apply for Hero Motors IPO?

Here are the steps to apply for this IPO:

• Log in to your Kotak Securities Demat account - Log in to your Demat account to access IPO investments. Next, select the current IPO section.
  
• Specify IPO details - Enter the number of lots and the price you wish to apply for.
  
• Enter UPI ID - After entering your UPI ID, click submit. This will place your bid with the exchange.
  
• Mandate Notification - Your UPI app will receive a mandate notification to block funds.
  
• Approve Request - Your funds will be blocked once you approve the mandate request on your UPI.