Hero Motors IPO: From shareholding to financials, what investors must know about Rs 1,200 cr issue and why it matters

Hero Motors IPO Date, Price, Lot Size, GMP Details: Can Hero Motors long-awaited IPO help shift gears in the market this time? Investors who have been tracking the company know this is not its first attempt to hit Dalal Street. The auto component maker had earlier filed for a Rs 900 crore IPO in 2024 but later decided to rework its plans. In July 2025, the Hero Motors refiled its Draft Red Herring Prospectus (DRHP) with SEBI, expanding the issue size to Rs 1,200 crore. 

Armed with SEBI’s green signal now, Hero Motors is gearing up for a much bigger listing.

Hero Motors IPO: Issue details

The upcoming IPO will be split between a fresh equity raise and an offer for sale (OFS). Out of the total Rs 1,200 crore, Rs 800 crore will come through the fresh issue, while Rs 400 crore will be offloaded via OFS.

Hero Motors IPO: Who’s selling stake via OFS?

The Offer for Sale (OFS) component of Hero Motors Rs 1,200 crore IPO is pegged at Rs 400 crore. The proceeds will be going directly to the selling shareholders and not to the company. 

Breakdown of who is offloading their stake –

O P Munjal Holdings – The largest participant in the Offer-for-sale is O P Munjal Holdings (promoter entity). They will offload shares worth up to Rs 390 crore. According to the DRHP filed by the company with SEBI on July 10, 2025, these shares are held by Pankaj Munjal on behalf of the holding company.

Bhagyoday Investments – Part of the promoter group, Bhagyoday Investments plans to offload shares worth Rs 50 crore.

Hero Cycles – Another promoter group entity, Hero Cycles, is also offering shares worth Rs 50 crore.

Hero Motors IPO: Objectives of the issue

Hero Motors will use the money from the fresh issue mainly to repay some of its borrowings and cut debt. As per the DRHP filing, a part of the funds is also planned for capacity expansion at its manufacturing unit in Gautam Buddha Nagar, Uttar Pradesh.

Another share of the proceeds will go towards acquisitions and other strategic initiatives, along with general corporate purposes. 

However, the company has set limits. Together these objectives two cannot exceed 35% of the IPO proceeds. Within this, general corporate purposes and acquisitions are each capped at 25%.

Furthermore, the company also mentioned that the funds will come from the IPO proceeds and the company’s internal resources. While the plan has not been reviewed by any external agency, a monitoring agency will oversee how the money is spent after listing. Any major change in fund use would need approval from shareholders.

Hero Motors IPO: Key services provided

Hero Motors operates in two main business segments. This includes Powertrain Solutions and Alloys & Metallics (A&M). 

Now coming to the Powertrain unit, it covers systems that power vehicles. This includes gears, transmissions, e-axles, and high-performance drive solutions. 

This auto component maker caters to the electric mobility space with products such as e-bike motors, CVT hubs, and integrated drive units. This is supported by design and engineering capabilities through its UK-based subsidiary, Hewland Engineering.

In addition, the Bike Powertrain division focuses on e-mobility for two-wheelers and bicycles. It offers ranges into electric motors, CVT hubs, and integrated drive systems under its ESYNC brand. Moreover, many of these solutions are built for global markets, including Europe and ASEAN.

Now in the second part of services provided, that is the Alloys & Metallics segment, Hero Motors manufactures structural and machined components such as swing arms, chain cases, cylinder blocks, and engine guards. This division uses processes like welding, machining, and painting and has expanded into forging components through a joint venture with the STP Group.

Hero Motors IPO: Financial performance 

Looking at the financial health of the company, for the nine months ended December 31, 2024, Hero Motors reported revenue from operations of Rs 8,072.65 million. In this, around 48% is contributed by Powertrain Solutions and the rest 52% by Alloys & Metallics.

Moreover, around 61% of revenue came from India. Meanwhile overseas markets, led by Europe, accounted for 39%. The company remains dependent on a concentrated customer base, with its top five clients generating over 60% of total revenue. 

The company’s gross profit stood at Rs 3,304.67 million. EBITDA was Rs 753.77 million. Profit after tax for the period was Rs 223.93 million.

On the balance sheet side, the company’s total assets were Rs 11,777.93 million, with borrowings at Rs 3,739.95 million. This translates into a debt-to-equity ratio of 0.91. Furthermore, cash flow from operations was positive at Rs 626.89 million, though investing activities led to a net cash outflow. 

Hero Motors IPO: Shareholder positions

Hero Motors’ ownership is dominated by its promoters and promoter group. On a fully diluted basis, which includes potential conversion of preference shares and exercised stock options, the promoters and promoter group together controlled about 85% of the company’s equity as per the Draft Red Herring Prospectus (DRHP). On the other side, public shareholders held around 13.5% of the equity before the IPO.

If you look at the promoters list, key players include Pankaj Munjal, Charu Munjal, Abhishek Munjal, and O P Munjal Holdings, along with entities such as Hero Cycles and Bhagyoday Investments under the wider promoter group.

Now coming to the company’s major shareholders, OP Munjal Holdings was the single largest holder with over 71% stake on a fully diluted basis. This was followed by South Asia Growth Invest LLC with about 12%. 

Apart from this, other major shareholders included Bhagyoday Investments (over 6%), Hero Cycles (about 2%), and individual stakes held by Pankaj Munjal and his family entities.

Hero Motors IPO: Market position

The company has emerged as a key automotive technology company and is known for its e-mobility and powertrain solutions. 

It is among the first Indian players to export CVT hubs for e-bikes. It also manufactures integrated electric drive units under its ‘ESYNC’ brand. 

The company has built a key presence in premium two-wheelers and high-performance vehicles with global clients like BMW and Ducati, and a joint venture with Yamaha for electric motors. 

The company runs plants in India, the UK, and Thailand. This is supported by advanced R&D centers. Recent tie-ups, including a stake in UK-based Hewland Engineering and a venture with STP Group.

Hero Motors IPO: Risks involved

Hero Motors DRHP, filed in July 2025, and in the filing it has highlighted key risks that investors need to keep in mind. Some of this include –

“Our business is dependent on the performance of certain industries, particularly e-bikes and two wheelers, both in the  Indian and overseas markets. Any adverse changes in the conditions affecting these industries can adversely impact our business, results of operations, cash flows and financial condition.”

“We depend on a certain limited set of suppliers for the supply of critical raw materials. Further, we do not have definitive supply agreements with all our suppliers for the supply of raw materials. Interruptions in the supply of raw materials could adversely affect our business, financial condition, results of operations and cash flows.”

“We may not be able to anticipate and respond swiftly to changing technological and market trends, as well as to develop new products aligned with customer demands in the automotive sector, which could have an adverse impact on our financial condition.”