Hero Motors has officially withdrawn its draft red herring prospectus (DRHP) submitted to the Securities and Exchange Board of India (Sebi) for its initial public offering (IPO). The decision was confirmed on October 5, 2024, according to SEBI’s processing status.
Hero Motors had initially filed for a Rs 900 crore IPO in August 2024, which included a fresh issue of up to Rs 500 crore. The remaining Rs 400 crore was designated as an offer for sale (OFS) from promoters OP Munjal Holdings, Bhagyoday Investments, and Hero Cycles.
Pankaj Munjal, the company’s owner and a first cousin of Hero MotoCorp Ltd’s chairman Pawan Munjal, leads Hero Motors. The firm specializes in providing powertrain solutions for both electric and non-electric vehicles to automotive original equipment manufacturers (OEMs).
Financial Performance
Despite the withdrawal of its IPO application, Hero Motors has shown promising financial growth. The company reported an increase in revenue, rising from Rs 914 crore in the financial year 2021-22 (FY22) to Rs 1,064 crore in FY24. Additionally, its gross profit surged from Rs 281 crore in FY22 to Rs 419 crore in FY24, achieving a compounded annual growth rate (CAGR) of 22%. The gross margin also saw significant improvement, growing from 30.78% in FY22 to 39.40% in FY24.
Market Implications
The withdrawal of the DRHP raises questions about the company’s future plans and market strategy, especially given the positive financial trajectory. Industry analysts will be closely monitoring Hero Motors’ next steps and any potential future offerings as the company continues to establish its presence in the competitive automotive component market.
