Hero Motors IPO Fully Subscribed On Day 1: Report

The initial public offering (IPO) of auto components manufacturer Hero Motors Ltd was fully subscribed on the first day of bidding on Wednesday, with demand led by retail investors. The ₹1,000-crore issue received bids for 12,26,40,042 shares against 8,86,07,596 shares on offer, taking the overall subscription level to 1.38 times, according to data from the National Stock Exchange (NSE), PTI reported.

The retail investor portion was subscribed 2.23 times, while the quota reserved for non-institutional investors was subscribed 1.25 times. The Qualified Institutional Buyers (QIB) portion saw subscription of 1 per cent.

Hero Motors operates as an automotive technology company focused on the design, development, manufacture and supply of engineered powertrain solutions to original equipment manufacturers (OEMs).

Hero Motors had raised nearly ₹300 crore from anchor investors on Tuesday, a day before the IPO opened for public subscription.

The company has set the IPO price band at ₹79-84 per equity share. The issue will remain open for subscription until September 18.

The IPO consists of a fresh issue of equity shares worth up to ₹600 crore and an Offer-for-Sale (OFS) component of up to ₹400 crore.

Under the OFS, OP Munjal Holdings will sell shares worth ₹395 crore, while Hero Cycles Ltd will divest shares valued at ₹5 crore.

The fresh capital is largely earmarked for strengthening the company's balance sheet and expanding manufacturing capacity. Hero Motors plans to use ₹190 crore to repay or prepay certain outstanding borrowings.

Another ₹200 crore from the fresh issue has been allocated towards the purchase of equipment for capacity expansion at its facility in Gautam Buddha Nagar, Uttar Pradesh.

The balance of the proceeds will be deployed towards inorganic growth, including potential acquisitions that have not yet been identified, along with other strategic initiatives and general corporate requirements.

Its customer base spans the US, Europe, India and the Association of Southeast Asian Nations (ASEAN) markets. The company counts BMW AG, Ducati Motor Holding SPA, Enviolo International Inc, Formula Motorsport Ltd and Hummingbird EV among its global customers.

The IPO comes as automotive suppliers continue to navigate changes in vehicle powertrain technology, including the gradual shift towards electrification alongside continued demand for conventional and hybrid powertrain components. For Hero Motors, the planned capacity expansion is aimed at supporting its manufacturing requirements as it develops its business across multiple geographies.

The proposed use of funds also points to a dual focus on reducing debt and adding manufacturing capacity, while leaving part of the fresh capital available for acquisitions and other strategic opportunities.

Hero Motors shares are expected to make their stock market debut on September 23.