He IPO It consists of a fresh issue of up to Rs 500 crore, while the remaining Rs 400 crore is an offer for sale (OFS) by promoters OP Munjal Holdings, Bhagyoday Investments and Hero Cycles.
The company intends to use the net proceeds from the fresh issue to repay outstanding borrowings, capital expenditure by purchasing equipment required for capacity expansion of Noida facility, finance working capital requirements and general corporate purposes.
Hero Motors said it may consider a pre-IPO placement of Rs 100 crore before filing of the Red Herring prospectus. And, if that happens, the pre-IPO placement figure will be reduced from the general corporate purposes portion of the fresh issue.
As of today, the promoters own 91.65% of the company. Hero Motors makes engine and transmission components for two-wheelers and has a global clientele that includes brands such as BMW, Ducati and Harley Davidson. In FY24, 49% of the company’s revenue came from powertrain solutions, while the remaining 51% came from the alloys and metallics (A&M) business segment. In terms of geography, about 59% of FY24 revenue came from India, 29% from Europe and about 8% from the US.
The company’s operating income increased from Rs 914.2 crore in FY22 to Rs 1,064.4 crore in FY24. Further, gross profit increased from Rs 281.4 crore in FY22 to Rs 419.4 crore in FY24 at a CAGR of 22%, while gross margin increased from 30.78% in FY22 to 39.40% in FY24.
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