Hero Motors Sets Price Band at ₹79 to ₹84 per Share for ₹1,000 Crore IPO

Auto components and mobility solutions manufacturer Hero Motors Ltd. has fixed the price band for its ₹1,000 crore Initial Public Offering (IPO) at ₹79 to ₹84 per share, according to its red herring prospectus.

At the upper end of the price band, the company is targeting a valuation of approximately ₹3,815 crore. The three-day public subscription will open on Wednesday, September 16, and close on Friday, September 18. The anchor investor bidding window will open a day earlier on Tuesday, September 15.

Issue Structure and Breakdown

The ₹1,000 crore public offer comprises a mix of fresh issuance and an offer for sale:

• Fresh Issue: Equity shares aggregating up to ₹600 crore.
• Offer for Sale (OFS): Shares aggregating up to ₹400 crore by existing promoters. Under the OFS, O P Munjal Holdings will divest shares worth ₹395 crore, while Hero Cycles Ltd. will offload shares worth ₹5 crore.
• Promoter Holding: Following the completion of the OFS and fresh issue, promoter shareholding is expected to dilute to 61.63% from 85.57%.

Lot Size and Key Dates

Investors can bid for a minimum lot of 178 shares and in multiples of 178 shares thereafter. At the upper price band of ₹84, retail investors will require a minimum application amount of ₹14,952.

• Anchor Bidding Date: September 15
• Issue Open Date: September 16
• Issue Close Date: September 18
• Basis of Allotment: September 21 (tentative)
• Initiation of Refunds & Demat Credit: September 22 (tentative)
• Listing Date: September 23 on BSE and NSE (tentative)

The reservation structure allocates up to 50% of the net issue to Qualified Institutional Buyers (QIBs), not less than 35% to Retail Individual Investors (RIIs), and not less than 15% to Non-Institutional Investors (NIIs).

Objects of the Issue

Hero Motors plans to deploy the net proceeds from the fresh issue towards several key operational and financial objectives:

• Debt Reduction: Approximately ₹190 crore will be utilized for the repayment or prepayment of outstanding borrowings.
• Capacity Expansion: About ₹200 crore will go towards purchasing equipment to expand manufacturing capacity at its Gautam Buddha Nagar facility in Uttar Pradesh.
• Strategic Growth: The remaining fresh proceeds will support inorganic growth via unidentified acquisitions and general corporate purposes.

Business Overview and Management

Led by Pankaj Munjal, Hero Motors is an automotive technology and powertrain solutions provider operating across India, the United Kingdom, and Thailand. The company manufactures high-precision transmission systems, drive units, and engine components for internal combustion engines (ICE) as well as electric vehicles (EVs) and e-bikes. Its global client base includes marquee automotive brands such as BMW and Ducati.

ICICI Securities, DAM Capital Advisors, and JM Financial are acting as the book running lead managers for the issue, while KFin Technologies serves as the registrar.

Tags: Hero Motors IPO Primary Market Auto Components SEBI NSE BSE