Hero Motors Gains SEBI Approval for Rs 1,200 Crore IPO

Hero Motors has received approval from the Securities and Exchange Board of India (SEBI) to move forward with its much-anticipated initial public offering (IPO), aiming to raise Rs 1,200 crore. This funding initiative represents a significant step for the company, which specializes in manufacturing engine and transmission parts for two-wheelers.

The IPO consists of a fresh issuance of shares worth Rs 800 crore and an offer for sale (OFS) totaling Rs 400 crore. The funds raised from the new issue will be allocated to various key areas, including debt repayment of approximately Rs 285 crore, capital expenditure of Rs 237 crore for modernizing equipment at its facility in Gautam Buddha Nagar, and financing acquisitions to support strategic growth. Additionally, the company aims to enhance its operational flexibility through general corporate purposes.

A significant portion of the OFS is expected to come from OP Munjal Holdings, which plans to sell shares worth Rs 390 crore. Other contributions in the OFS include Rs 5 crore each from Bhagyoday Investments and Hero Cycles.

IPO Structure and Allotment Details

The IPO will feature a face value of Rs 10 per equity share. According to SEBI guidelines, 50% of the shares will be allocated to qualified institutional buyers (QIBs), 15% to non-institutional investors, and the remaining 35% to retail investors. Furthermore, Hero Motors is contemplating a pre-IPO placement of up to Rs 160 crore, which would reduce the size of the fresh issue proportionately.

The book-running lead managers for the IPO are ICICI Securities, DAM Capital Advisors, and JM Financial, while KFin Technologies will act as the registrar.

Company Background and Future Plans

Hero Motors, under the leadership of Pankaj Munjal, is a key supplier of high-precision components to leading global two-wheeler manufacturers, including BMW, Ducati, and Harley-Davidson. Initially, the company sought to raise Rs 900 crore through its IPO in August 2024 but opted to revise its plans. In July 2025, Hero Motors submitted a new Draft Red Herring Prospectus (DRHP), reflecting a revised issue size of Rs 1,200 crore in line with its growth strategy.

As of December 2024, the company operated six manufacturing plants located in India, the United Kingdom, and Thailand, aimed at enhancing supply chains and optimizing costs. Promoter shareholdings in Hero Motors stood at 91.65%, indicating strong backing from founding stakeholders.

With SEBI’s approval, Hero Motors is poised to access the capital markets to finance its debt obligations, modernize its operations, and expand its global footprint. This IPO marks a pivotal moment for the auto component manufacturer as it seeks to solidify its standing within the competitive two-wheeler supply chain and diminish its dependence on promoter funding.