Hero Motors withdraws DRHP for ₹900 crore IPO

Hero Motors, an auto components manufacturer led by Pankaj Munjal, who is a first cousin of Hero MotoCorp's chairman Pawan Munjal, has withdrawn its Draft Red Herring Prospectus (DRHP) filed with the capital markets regulator SEBI.

In August this year, Hero Motors had submitted IPO documents to the Securities and Exchange Board of India (Sebi) for a ₹900 crore public offering. The IPO comprised a fresh issue of shares worth up to ₹500 crore, with the remaining ₹400 crore being an offer for sale (OFS) by promoters OP Munjal Holdings, Bhagyoday Investments, and Hero Cycles.

Promoter OP Munjal Holdings was reportedly selling shares worth ₹250 crore through the OFS, while other promoters, Bhagyoday Investments and Hero Cycles, are expected to offload shares worth ₹75 crore each in the same offering.

The company stated that it will use the net proceeds from the new issuance to pay off outstanding debts, fund capital expenditures for acquiring equipment needed to expand the Noida facility's capacity, support working capital needs, and cover general corporate expenses.

Previously, Hero Motors mentioned that it might explore a pre-IPO placement of ₹100 crore before submitting the Red Herring Prospectus. If this occurs, the amount raised from the pre-IPO placement will be deducted from the general corporate purposes allocation of the new issuance.

Hero Motors supplies powertrain solutions, both electric and non-electric, to automotive original equipment manufacturers (OEMs) in the United States, Europe, and India.

Hero Motors experienced a revenue increase from ₹914 crore in FY22 to ₹1,064 crore in FY24. During the same period, its gross profit rose from ₹281 crore to ₹419 crore, reflecting a compound annual growth rate (CAGR) of 22%. Additionally, the gross margin improved from 30.78% in FY22 to 39.40% in FY24.

ICICI Securities, DAM Capital Advisors, and JM Financial are serving as the book-running lead managers for the issue.