IPO Alert: Hero Motors Submitted DRHP With SEBI

One of India’s leading automotive technology companies, Hero Motors Limited, has filed the draft red herring prospectus (DRHP) with the market regulator Securities and Exchange Board of India (SEBI) to float an initial public offering (IPO) to raise ₹900 crore from the public. Hero Motors’ IPO will consist of a fresh issue and an offer for sale. The company seeks to raise ₹500 crore from the fresh issue portion ₹400 crore from the offer for sale.

Purpose of Hero Motors’ IPO

Fresh Issue

The company proposes to utilise the net proceeds from the fresh issue towards funding the following objects:

• Repayment/prepayment, in full or in part, of certain outstanding borrowings availed by the company.
• Capital expenditure of the company through the purchase of equipment required for expansion in capacity.
• Funding working capital requirements.
• General corporate purposes.

Offer For Sale

The Selling Shareholders will be entitled to their respective portion of the proceeds of the Offer for Sale after deducting their proportion of Offer expenses and relevant taxes thereon. The company will not receive any proceeds from the Offer for Sale, and the proceeds received from the Offer for Sale will not form part of the Net Proceeds.

Hero Motors Limited Overview

Incorporated in 1998, Hero Motors Limited is one of India’s leading automotive technology companies. It designs, develops, manufactures, and supplies highly engineered powertrain solutions to automotive original equipment manufacturers (OEMs) in the United States, Europe, India, and the Association of Southeast Asian Nations (ASEAN) region.

The company operates its business from two segments: Powertrain Solutions and Alloys and Metallics (A&M). Powertrains are integrated systems designed to propel a vehicle by converting energy into motion. They include the engine or motor, energy storage systems, transmission, driveshaft, and other related components that work together to deliver power to the vehicle’s wheel.

The A&M segment provides sheet metal and tubular assemblies and component solutions, primarily to automotive OEMs. The strategy has been to focus on continuous value addition and the development of complete systems by utilising advanced technology to deliver e-mobility solutions to customers.

In 2021, the company entered into a joint venture with Yamaha Motors Japan to manufacture electric motors under the ‘HYM’ brand, which commenced operations in 2022. In 2023, the company launched a transmission manufacturing facility at Samut Prakan, Thailand, expanding its gearbox supply within the ASEAN region.

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.