Ola Electric Mobility has caused quite a stir since its IPO listing. The company has delivered double returns to investors, reaching a high of ₹157.40 post-listing after debuting at ₹76. Although there has been a slight decline in the share price recently, the overall performance has been impressive. Now, another major player in the automotive sector, Hero Motors Company (HMC), is gearing up to launch its own IPO, having submitted a draft to the market regulator SEBI.
Plans to Raise ₹900 Crores
Hero Motors plans to raise ₹900 crores through its IPO. According to the Draft Red Herring Prospectus (DRHP), the offer will include the issuance of equity shares worth ₹500 crores, along with an Offer for Sale (OFS) of shares valued at ₹400 crores from the promoters.
The OFS will see OP Munjal Holdings offering shares worth ₹250 crores, while Bhagyodaya Investments and Hero Cycles will extend ₹75 crores each. Notably, the company may raise ₹100 crores prior to the IPO, subsequently reducing the size of the new issue. The funds raised will be allocated for debt repayment, capacity expansion, and other corporate purposes.
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Returns of 83% in One Year
It’s worth mentioning that Hero MotoCorp Limited, a subsidiary, is already listed in the market, providing an impressive 83% return over the past year. Currently trading at ₹5,382, the company has yet to clarify the price band for its upcoming IPO. However, the frequent IPO listings are promising indicators for the Indian market.
Global Clientele Including BMW
Hero Motors ranks among India’s leading automotive firms, supplying powertrain solutions—both electric and non-electric—to Original Equipment Manufacturers (OEMs) across the United States, Europe, India, and the ASEAN region. The company caters to notable global clients including BMW AG, Ducati Motor Holding SPA, Envoylo International Inc, Formula Motorsport, Hummingbird Inc, HWA AG, and various international electric bicycle manufacturers. Despite this robust clientele, Hero Motors reported a net profit of ₹17 crores for the financial year ending March 2024, a significant drop of 58% from the ₹40.5 crores profit in the previous year. The company’s revenue showed a modest increase from ₹1,054.6 crores to ₹1,064.4 crores during the same period.
Outlook
With evident growth potential and a strong foundation, Hero Motors is poised to make waves in the automotive sector with its forthcoming IPO. As more companies explore public offerings, the Indian economy may see enhanced investment opportunities and market dynamics, making it an exciting time for investors.
