Hero Motors, an Indian auto parts manufacturer, has filed for an initial public offering (IPO) valued at up to 12 billion rupees (US$140.1 million), according to draft documents submitted on July 10, 2025.

The IPO will consist of new shares worth 8 billion rupees (US$93.44 million) and the sale of existing shares from shareholders valued at up to 4 billion rupees (US$47.9 million).

Proceeds from the offering will be used to reduce debt and acquire equipment for facility expansion in Uttar Pradesh.

The company supplies parts to clients, including BMW and Ducati.

It is led by Pankaj Munjal, a member of the Munjal family, which also operates Hero MotoCorp, India’s largest two-wheeler manufacturer.

ICICI Securities, JM Financial, and DAM Capital are the lead managers for the IPO.

For the fiscal year 2024, Hero Motors reported a 67% decline in net profit due to rising expenses, despite a nearly 1% increase in revenue.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Counter-cyclical IPO amid industry-wide profit challenges

Hero Motors’ IPO filing comes at a time when automotive companies globally are experiencing significant profit pressures, creating a challenging market environment for new listings.

The company’s own 67% decline in net profit despite revenue growth mirrors similar struggles across the sector. This timing suggests a strategic move to secure funding for debt reduction and expansion while navigating the current industry downturn, potentially positioning the company for the projected growth of India’s auto components sector to US$200 billion by FY26 1.

The decision to pursue a public listing despite profitability challenges indicates confidence in the company’s long-term prospects, particularly as India emerges as a global sourcing hub with auto component exports anticipated to reach US$80 billion by 2026 1.

2️⃣ Strategic positioning in India’s evolving auto component landscape

Hero Motors’ client portfolio, which includes global brands like BMW and Ducati, highlights its integration into international supply chains at a time when the global automotive ecosystem is being reconfigured.

The auto components industry in India is expected to contribute 5-7% to India’s GDP by 2026, reflecting its growing economic importance beyond the 2.3% it currently represents 1.