Hero Motors Withdraws IPO Amid Market Uncertainties Over Middle East Conflict

Hero Motors Ltd, a subsidiary of two-wheeler giant Hero Motors Company (HMC) Group, has unexpectedly withdrawn its Rs 900 crore initial public offering (IPO), according to a regulatory update from the Securities and Exchange Board of India (SEBI) on Monday. The sudden move is sending ripples through the automotive and financial sectors.

Hero Motors had filed a draft red herring prospectus (DRHP) with SEBI in August, aiming to raise Rs 500 crore via fresh equity and Rs 400 crore through an offer for sale (OFS) by its promoters. The IPO was earmarked to fund expansion at its Gautam Buddha Nagar plant and reduce the company’s debt burden.

The reasons behind the abrupt withdrawal remain undisclosed, with the company only confirming that it retracted the DRHP on October 5, 2024. This surprise decision comes amid rising market volatility, putting the firm’s growth strategy into question.

Hero Motors Ltd, a leading provider of automotive technology and powertrain solutions for major OEMs in the U.S., Europe, India, and ASEAN, had reported strong financial performance ahead of the proposed listing. The company’s revenue surged from Rs 914 crore in FY22 to Rs 1,064 crore in FY24, while gross profit jumped to Rs 419 crore, driven by a robust 22% CAGR over the two years.

Hyundai IPO Signals Strength Despite Market Volatility

In contrast, Hyundai Motor India’s massive Rs 25,000 crore IPO, set to launch on October 14, has received regulatory approval, marking one of the largest Indian listings since LIC’s Rs 21,000 crore IPO. The Hyundai IPO, entirely an OFS of 14.2 crore shares, could place Hyundai India’s market cap at nearly half of its Seoul-listed parent’s $47 billion valuation.

This disparity between Hero’s sudden withdrawal and Hyundai’s ambitious listing highlights diverging strategies in a highly unpredictable market.

The Indian equity market continues to reel under pressure, closing down for the sixth straight session. The BSE Sensex tumbled 638 points to 81,050, while the NSE Nifty shed 219 points to finish at 24,796. This prolonged sell-off has been triggered by foreign fund outflows and geopolitical tensions in the Middle East.

Over the last six trading days, Sensex has plummeted nearly 4,800 points, with Nifty down by 1,420 points. Investor wealth has taken a significant hit, with Rs 25.16 lakh crore wiped out since late September.

As Hero Motors pulls back from the capital markets, Hyundai’s impending listing may signal where investor confidence lies in the current climate. The contrasting moves underscore the need for firms to navigate both market sentiment and global uncertainties with precision.