Business Profile of Hero Motor Limited
Hero Motors Limited is automotive technology company in India and company has expertise design, development, supply and manufacturing high quality powertrain solutions for automotive equipment in region of United States, Europe, India, and the ASEAN countries. Under the product portfolio of company includes a, large range mobility uses such as performance automotive, hybrid cars, two-wheelers, e-bikes, electric and off-road vehicles and electric vertical take-off and landing (eVTOL) aircraft. Hero Motor operates in two segments first is Powertrain Solutions in which integrated systems designed to propel vehicles by converting energy into motion. Alloys and Metallics is second business segment in this advanced materials used in EVs, internal combustion engine vehicles (ICEs), and hybrid vehicles, making them powertrain-neutral.
Objective of Hero Motor IPO
As per the draft red hearing prospects, the IPO issue consists fresh issue and offer for sale. The fresh issue consists of XXXX shares at the face value of ₨ 10.00 each aggregating up to ₹ 8,000.00 millions and OFS consists XXXX shares at face value of ₨ 5.00 each aggregating up to ₨ 4,000.00 millions. There are fresh shares issues and OFS by company and main objective of company is funding repayment, capital expenditure in company, funding inorganic growth and general corporate expenses.
Details of Hero Motor IPO
| IPO Open Date | N.A. |
| IPO Close Date | N.A. |
| Basis of Allotment | N.A. |
| Listing Date | N.A. |
| Face Value | ₹10.00 per share |
| Price | N.A. |
| Lot Size | N.A. |
| Total Issue Size | Up to XXXX Equity Shares |
| Aggregating up to ₨12,000.00 million | |
| Fresh Issue | Up to XXXX Equity Shares |
| Aggregating up to ₨ 8,000.00 million | |
| Offer For Sale | Up to XXXX Equity Shares |
| Aggregating up to ₨ 4,000.00 million | |
| Issue Type | Book Built Issue IPO |
| Listing At | BSE & NSE |
| QIB Shares Offered | Not more than 50% of the Net Issue |
| Retail Shares Offered | Not more than 35% of the Net Issue |
| NII (HNI) Shares Offered | Not less than 15% of the Net Issue |
Hero Motor IPO: Issue Price & Size
The issue price of HERO MOTORLIMITED hasn’t been released yet. Upon releasing the dates, the investors can bid between those price ranges. The company has fresh issue and OFS aggregating up to ₹ 12,000.00 million at the price of ₨XXXX.
Launch Date of Hero Motor IPO
The IPO opening date of HERO MOTORLIMITED hasn’t been officially announced yet, upon the declaration of dates investor can bid for IPO.
Financial Statements of Hero Motor Limited
| Particulars (Rs in Millions) | Ended Dec 31 , 2024 | Mar 31 , 2024 |
Mar 31 , 2023 | Mar 31,2022 |
| Income | ||||
| Revenue from operations | 8,072.65 | 10,643.86 | 10,546.24 | 9,141.91 |
| Other income | 165.37 | 190 33 | 153.72 | 69.55 |
| Total income | 8,238.02 | 10,834.19 | 10,699.96 | 9,211.46 |
| Expenses | ||||
| ( a ) Cost of materials consumed | 4,921.86 | 6,404.49 | 7,562.94 | 5,204.43 |
| ( b ) Purchase of stock – in – trade | 17.45 | . | – | 1,398.80 |
| ( c ) Changes in inventories of finished goods | ( 17133 ) | 45.67 | ( 377.44 ) | ( 275.15 ) |
| ( d ) Employee benefits expenses | 1,317.02 | 1,808.35 | 933.12 | 558.63 |
| ( e ) Finance costs | 242.47 | 299.45 | 269.33 | 143.89 |
| ( f ) Depreciation and amortization expenses | 266.11 | 285.51 | 182.85 | 159.09 |
| ( g ) Other expenses | 1,399.25 | 1,747.60 | 1,591.58 | 1,302.82 |
| Total expenses | 7992.83 | 10,591.07 | 10,162.38 | 8,492.51 |
| Restated profit before share of net loss of associates | 245.19 | 243.12 | 537.58 | 718.95 |
| Add : Share of net loss of associates net of tax | ( 16.25 ) | – | ||
| Restated profit before exceptional items and tax | 245.19 | 24312 | 52133 | 718.95 |
| Exceptional item | 657.41 | |||
| Restated profit before tax | 245.19 | 243.12 | 521.33 | 1,376.36 |
| Tax expense | ||||
| ( a ) Current tax | 3145 | 1246 | 173.71 | 274.17 |
| ( b ) Deferred tax | ( 10.19 ) | 60.31 | ( 57.44 ) | 111.97 |
| Total tax expense | 21.26 | 72.77 | 116.27 | 386.14 |
| Restated profit for the period | 223.93 | 170.35 | 405.06 | 990.21 |
Key financial ratios of Hero Motor Limited
| Particulars | Ended Dec 31 ,2024 | 2024 | 2023 | 2022 |
| Revenue from Operations | 8,072.65 | 10,643.86 | 10,546.24 | 9,141.91 |
| Revenue from operations growths ( % ) | NA | 0.93 % | 15.36 % | – |
| Gross Profit ) | 3,304.67 | 4,193.70 | 3,360.74 | 2,813.83 |
| Gross Margin ( % ) | 40.94 % | 39.40 % | 31.87 % | 30.78 % |
| EBITDA | 753.77 | 828.08 | 973.51 | 1,679.34 |
| EBITDA Margin( % ) | 9.34 % | 7.78 % | 9.23 % | 18.37 % |
| Adjusted EBITDA | 864.91 | 1,222.70 | 1,107.01 | 1,021.93 |
| Adjusted EBITDA Margin | 10.71 % | 11.49 % | 10.50 % | 11.18 % |
| Restated profit after tax (in millions) | 223.93 | 170.35 | 405.06 | 990.22 |
| PAT Margin ( % ) | 2.77 % | 1.60 % | 3.84 % | 10.83 % |
| Return on Equity( % ) | 5.44 % | 4.54 % | 12.01 % | 61.61 % |
| Return on Capital Employed ( % ) | 13.39 % | 22.59 % | 26.16 % | 29.38 % |
| Net Debt to Adjusted EBITDA ) ( in times ) | 3.45 | 1.76 | 1.59 | 2.07 |
| Fixed Asset Turnover Ratio | 1.48 | 2.40 | 3.20 | 4.69 |
| Asset Turnover Ratio | 0.69 | 1.00 | 1.06 | 1.30 |
| Receivable Days | 63 | 67 | 87 | 75 |
| Inventory Days | 71 | 62 | 68 | 57 |
| Trade payable days | 48 | 47 | 51 | 55 |
Promoters & Shareholding Hero Motor IPO
As of date, according to the DRHP filed with SEBI promoters and promoter group have 91.41% shareholding in company.
| Name | Number of shareholders | Number of Equity Shares | % Equity Shares |
| Promoters & Promoter Group | 9 | 327,540,186 | 91.41% |
| Public | 83 | 30,795,833 | 8.59% |
| Total (A+B) | 92 | 358,336,019 | 100% |
Should You Subscribe To Hero Motor IPO
While investing or subscribing to any IPO, consider the investment rationales related to the company. Hence, here you can find out the strength of the company that will be its growth factors. And also check the risk factors that can affect the growth and operational efficiency of the company.
Competitive Strengths of Hero Motor IPO
Market Presence in Electric Bikes
Over the last five years, company has expanded its market presence across automotive segments and has grown its business with premium two-wheeler OEMs globally. In the field of premium two-wheeler segment, company has partnered with OEMs such as BMW, Ducati and a leading American two-wheeler OEM among others, for Powertrain Solutions covering design, development, prototyping, validation and high volume manufacturing. The company has capabilities to deliver complete system solutions for e-bikes, including design, development, and cost-effective solutions, all while maintaining stringent quality standards.
Longstanding Relationships with Global manufacturer
The company has diverse and premium customer base, serving clients both in India and internationally. The global OEM portfolio includes a wide range of customers, spanning both automotive and non-automotive sectors. In the automotive sector, company collaborate with global two-wheeler OEMs including BMW, Ducati, and Hero MotoCorp; players from motor sport industries such as Formula Motorsport and HWA Engineering; global commercial vehicle and off-road OEMs such as Escorts; and enviolo. It helps in longstanding relationship with such premium customer’s act as an entry barrier to competition.
Advanced Infrastructure
The operational strength extends worldwide as company strategically establish manufacturing and assembly facilities to meet diverse market and customer demands. The strategic geographic dispersion of G&T facilities across India, the United Kingdom, and Thailand allows company to be in close proximity to its customers and offer cost competitive solutions. The significant revenue from global market not only mitigates regional economic fluctuations but also cultivates resilient growth and enhances brand visibility worldwide.
Strong Research and Development Capabilities
Over the period, company has expanded its capabilities to include design and engineering. Hero motor ltd. has been significantly increasing its research and development expenses to invest in the future and have augmented our resources by establishing technology centers, expanding our facilities globally, and incorporating in-house engineering and testing equipment. Hewland granted company access to advanced design and prototyping capabilities, enabling us to cover the entire value chain and transition into a comprehensive systems provider.
Risk Factors of Hero Motor IPO
Large overseas revenue
The company generates a portion of its revenue from operations from jurisdictions outside India, in particular, from Europe which contributed 26.27%, 29.33%, 32.47% and 29.34% of its revenue from operations, in the nine months ended December 31, 2024 and Fiscal 2024, 2023 and 2022, respectively. An economic slowdown in these geographies/countries may have a significant adverse impact on our business, financial condition, cash flows and results of operation.
Key dependency in e-bikes and two wheelers
The business of company is dependent on the performance of certain industries particularly e-bikes and two wheelers, both in the Indian and overseas markets. Company sales are directly dependent on the production levels of these industries domestically and globally. Any adverse changes in the conditions affecting these industries can adversely impact company business, results of operations, cash flows and financial condition.
Customer concentration
The company business largely depends upon its top 10 customers. In the nine months ended December 31, 2024 and Fiscal 2024, 2023 and 2022 our revenue from operations from top 10 customers was ₹ 6,010.73 million, ₹ 8,191.86 million, ₹ 9,369.23 million, and ₹ 7,859.23 million, representing 74.46%, 76.96%, 88.84%, and 85.97% of our revenue from operations, respectively. Loss of all or a substantial portion of sales to any of our top 10 customers, for any reason could have an adverse impact on their business.
Large capex requirement
The company has substantial capital expenditure and working capital requirements and may require additional capital and financing in the future. They typically rely on internal accruals as well as credit facilities with banks to provide for their working capital arrangements. Any inability to obtain adequate amount of working capital at such terms which are favorable to company and in a timely manner or at all may also have an adverse effect on its results of operations & cash flows.
Hero Motor IPO Grey Market Premium
Grey market premium is the premium quoted over the IPO issue price. GMP shows that investors are ready to pay above the upper band of the IPO issue price. GMP is determined in the grey market as per the demand and supply of the shares in the primary market. A grey market is that unofficial ecosystem of unlisted companies’ stocks that start trading even before the launch of the IPO to the date of its listing.
Also Read: What is Grey Market Premium in IPO: How is GMP Calculated & Reliable
However, GMP is not a reliable factor, as it keeps fluctuating as per the demand and supply of shares in the primary market. There are numerous factors that affect the stock market in India and individual stock prices of different companies that are already listed and trading in the secondary market. However, for an IPO-bounded company, you can consider the GMP as the speculative listing price of the share
According to various online sources, the Grey Market Premium or GMP of the Hero Motor Limited is trading around Rs XX in the grey market. It means shares are trading at the upper band issue price of Rs XX with a premium in the grey market and may list around the same price.
