Hero Motors has received regulatory clearance from the Securities and Exchange Board of India (SEBI) to proceed with its long-overdue initial public offering (IPO). The company, one of the largest manufacturers of two-wheeler engine and transmission parts, intends to raise Rs 1,200 crore through a combination of a fresh issuance of equity and an offer for sale (OFS).
The IPO will include a fresh issue worth Rs 800 crore and an OFS of Rs 400 crore. Proceeds from the fresh issue will be deployed across several priorities:
Debt repayment of about Rs 285 crore.
Capital expenditure of Rs 237 crore to install advanced equipment at the company’s Gautam Buddha Nagar facility.
Financing acquisitions that will bolster strategic growth.
General corporate purposes with enhanced liquidity and greater flexibility in operations.
The OFS transaction is expected to consist of a Rs 390 crore stake sale by OP Munjal Holdings, with a likely contribution of Rs 5 crore each from Bhagyoday Investments and Hero Cycles as well.
The issue has a face value of Rs 10 per equity share. According to SEBI rules, 50% of the issue will be allotted to qualified institutional buyers (QIBs), 15% to non-institutional investors, and the remaining 35% to retail individual investors.
Additionally, Hero Motors may consider a pre-IPO placement of up to Rs 160 crore. If such a placement occurs, the fresh issue size will be reduced proportionately.
ICICI Securities, DAM Capital Advisors, and JM Financial are acting as book-running lead managers for the issue, while KFin Technologies will serve as registrar.
Hero Motors, a prominent supplier of high-precision components to global two-wheeler brands such as BMW, Ducati, and Harley-Davidson, is managed by Pankaj Munjal, the cousin of Hero MotoCorp Chairman Pawan Munjal.
Hero Motors planned to raise Rs 900 crore by filing for an IPO in August 2024; however, it refiled a Draft Red Herring Prospectus (DRHP) in July 2025 with a revised issue size of Rs 1,200 crore after reviewing its growth plans.
Hero Motors, in December 2024, had six manufacturing plants in India, the United Kingdom, and Thailand to increase supply chains and reduce costs. As of December 2024, promoter shareholdings in the company equaled 91.65%.
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With SEBI clearance, Hero Motors is expected to access the capital markets to finance its debt repayment, modernization, and global expansion plans.
The IPO is a significant moment for the auto component manufacturer as it attempts to strengthen its position within the competitive two-wheeler supply chain and reduce its reliance on promoter funding.