Hero Motors deploys Rs 189.84 crore of IPO funds for debt

Hero Motors Limited deployed Rs 189.84 crore of net initial public offering, or IPO, proceeds to repay, prepay or redeem borrowings by September 30, 2026, leaving Rs 345.15 crore unutilised. The company had used none of the Rs 200 crore allocated to equipment for capacity expansion at its Gautam Buddha Nagar, Uttar Pradesh facility.

How did Hero Motors use its IPO proceeds?

Hero Motors used Rs 216.84 crore of Rs 561.99 crore in net IPO proceeds by September 30, 2026. This consisted of Rs 189.84 crore for repayment, prepayment or redemption of borrowings and Rs 27 crore for inorganic growth, strategic initiatives and general corporate purposes, leaving Rs 345.15 crore unutilised.

Debt repayment was the largest completed use of the proceeds. Hero Motors had allocated Rs 190 crore for certain outstanding borrowings, meaning only Rs 16 lakh of that allocation was unspent at September-end. The company allocated Rs 171.99 crore to inorganic growth, strategic initiatives and general corporate purposes, of which it had used Rs 27 crore and retained Rs 144.99 crore.

The third identified use was capital expenditure through equipment purchases for the Gautam Buddha Nagar facility. Hero Motors allocated Rs 200 crore to that purpose but reported no utilisation by September 30, 2026. The disclosed deployment across the three categories was therefore Rs 216.84 crore, or less than half of the Rs 561.99 crore net proceeds.

What happened to Hero Motors' Uttar Pradesh expansion allocation?

Hero Motors had not deployed any of the Rs 200 crore assigned to equipment for capacity expansion at its Gautam Buddha Nagar, Uttar Pradesh facility as of September 30, 2026. The full allocation remained unutilised at the end of the first reported period after the company’s September 23, 2026 listing.

The standalone balance sheet nevertheless recorded capital work in progress of Rs 54.25 crore at September 30, 2026, compared with Rs 46.38 crore at March 31, 2026. That was an increase of Rs 7.87 crore, but the IPO-utilisation disclosure separately confirms that none of the Rs 200 crore equipment allocation had been funded from IPO proceeds by the reporting date.

Hero Motors described the planned expenditure as the purchase of equipment required to expand capacity at the Gautam Buddha Nagar facility. The filing does not disclose an equipment-order schedule, commissioning date, capacity target or phased spending plan for this allocation, limiting the reported position to nil IPO-funded expenditure through September-end.

How did the IPO affect Hero Motors' borrowings?

Hero Motors reported standalone current borrowings of Rs 106.37 crore and non-current borrowings of Rs 4.23 crore at September 30, 2026, compared with Rs 221.77 crore and Rs 69.56 crore, respectively, at March 31, 2026. The reduction occurred during the period in which the company deployed Rs 189.84 crore of IPO proceeds toward borrowings.

Combined current and non-current borrowings were Rs 110.60 crore at September 30, 2026, down from Rs 291.33 crore at March 31, 2026. The standalone cash-flow statement for the half year also reported Rs 22.59 crore of proceeds from long-term borrowings and Rs 121.79 crore of repayment of long-term borrowings.

Finance costs did not decline in the half-year comparison disclosed in the standalone results. They were Rs 16.17 crore for the half year ended September 30, 2026, versus Rs 14.98 crore for the half year ended September 30, 2025. In the September 2026 quarter, finance costs were Rs 8.13 crore, compared with Rs 8.03 crore in the June 2026 quarter.

What were Hero Motors' IPO proceeds and where were unused funds held?

Hero Motors raised Rs 600 crore through a fresh issue of 7,14,28,571 equity shares priced at Rs 84 each, and reported Rs 561.99 crore in net proceeds after Rs 38.01 crore of provisionally allocated IPO expenses. Its equity shares were listed on the National Stock Exchange of India and BSE on September 23, 2026.

The overall offer also included an offer for sale of Rs 400 crore by OP Munjal Holdings and Hero Cycles Limited. Those proceeds were separate from the fresh issue received by Hero Motors. Total offer expenses were estimated at Rs 60.25 crore, inclusive of taxes, and were allocated proportionately between the selling shareholders and the company according to their respective offer sizes.

Hero Motors said unutilised net proceeds were temporarily invested in deposits and partly held in scheduled commercial bank accounts as of September 30, 2026. Separately, the standalone balance sheet reported Rs 223.45 crore of bank balances other than cash equivalents and Rs 34.19 crore of cash and cash equivalents; the filing does not identify what portion of those balances represented unused IPO funds.

The half-year cash-flow statement reported Rs 567.35 crore in IPO proceeds net of offer-related expenses, excluding taxes. The proceeds-utilisation note, however, identifies Rs 561.99 crore of net proceeds after provisionally allocated IPO expenses as the amount available for the three stated uses, including debt repayment and the Uttar Pradesh equipment programme.

Conclusion

Hero Motors had substantially completed the use of its Rs 190 crore borrowing-repayment allocation by September 30, 2026, deploying Rs 189.84 crore and leaving Rs 16 lakh under that category. Of Rs 561.99 crore in net IPO proceeds, Rs 216.84 crore had been used, while the unspent balance was concentrated in the Rs 200 crore equipment allocation and Rs 144.99 crore for inorganic growth, strategic initiatives and general corporate purposes.

The next reported development to watch is spending on equipment for the Gautam Buddha Nagar facility, because the entire Rs 200 crore allocation was unutilised at September-end. Hero Motors’ filings may also clarify the use of the remaining Rs 144.99 crore earmarked for unidentified acquisitions, strategic initiatives and general corporate purposes, for which the disclosure gives no transaction, target or deployment timetable.