Hero Motors goes public (Image source: iStockphoto)
Hero Enginesan auto component manufacturer run by Pankaj Munjal, a cousin of the chairman of Hero MotoCorp Pawan MunjalRed Herring Holdings (DRHP) has filed a draft prospectus for an initial public offering worth Rs 900 crore. The IPO comprises a fresh issue of shares worth Rs 500 crore, while the remaining Rs 400 crore will be an offer for sale by existing promoters including OP Munjal Holdings, Bhagyoday Investments and Hero Cycles.
The company plans to use the proceeds from the fresh issue to repay outstanding borrowings, invest in capital expenditure to expand its Noida facility, fund working capital needs and meet general corporate expenses. Hero Motors also indicated that it may consider a pre-IPO placement of up to Rs 100 crore. If this happens, the pre-IPO amount will be deducted from the allocation for general corporate purposes of the fresh issue. Currently, the promoters hold 91.65% of the company.
Hero Motors specialises in manufacturing engine and transmission components for two-wheelers, with a global customer base that includes BMW, Ducati and Harley-Davidson. In fiscal year 2024, 49% of the company’s revenue was generated from powertrain solutions, while 51% was generated from its alloys and metal components (A&M) business segment. Geographically, 59% of FY24 revenue was generated from India, 29% from Europe and 8% from the US.
The company’s operating income grew from Rs 914.2 crore in FY22 to Rs 1,064.4 crore in FY24. Gross profit also increased from Rs 281.4 crore in FY22 to Rs 419.4 crore in FY24, reflecting a compound annual growth rate (CAGR) of 22%. Meanwhile, gross margin improved from 30.78% in FY22 to 39.40% in FY24.
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