Hero FinCorp IPO: An Upcoming Bet Amid Shifting Gears in Lending

29 August 2025

Hero FinCorp Ltd (HFCL), the lending arm of Hero MotoCorp, is gearing up for an IPO.  The total IPO size is now ₹3,408 crore, marking a reduction from the ₹3,668 crore planned earlier. Hero Fincorp IPO backed by Apollo Global, ChrysCapital and Apis Partners.

Ahead of the IPO, the company completed two pre-IPO placements that not only strengthened its balance sheet but also set the tone for its market valuation. On June 5, 2025, Hero FinCorp raised ₹260 crore by allotting 18.57 lakh shares to 12 investors at a price of ₹1,400 per share, translating to a valuation of nearly ₹25,014 crore. This round brought in marquee investors such as Shahi Exports and RVG Jatropha. This pre-IPO round led to a reduction of ₹260 crore in the fresh issue size of the IPO.

 

On July 11, 2025, a second round added ₹50 crore from Vattikuti Ventures. This was achieved by allotting 3.57 lakh shares at ₹1,400 per share. This second placement further reduced the fresh issue size by ₹50 crore, bringing the revised fresh issue size to ₹1,790 crore. With these two rounds, the company mobilised ₹310 crore out of its target of ₹420 crore through pre-IPO placements.

At ₹1,400 per share, Hero FinCorp is valued at a P/B multiple of ~2.98x, based on its FY25 book value of ₹452 per share. The company is currently valued at ~ ₹25,014 crore, reflecting investor confidence in its recalibrated strategy and long-term growth prospects.

In Q1 FY26, Hero FinCorp reported a net loss of ₹49.7 crore, reversing from a profit a year ago, despite modest revenue growth to ₹2,333 crore, as compared to Q1 FY25 revenue of ₹2,250 crore. The weakness stemmed from elevated impairment costs, which soared to ₹2,884 crore(FY25) from  ₹1,205 crore(FY24) up by 67%, as the company grapples with stress in its unsecured loan book. Provisions rose by 5.3% YoY to ₹740 Cr, and Net NPA increased to 2.50% from 2.15%., forcing management to recalibrate its lending model.

To reassure investors, the company has paused fresh disbursements in unsecured lending and is pivoting toward secured products such as vehicle and SME loans. Management still guides for around 14% loan growth in FY26, highlighting confidence in its franchise strength and distribution network built around Hero MotoCorp dealerships.

Hero FinCorp's IPO strategy bolsters Tier-1 capital, strengthens its lending base, and taps the public markets at a more optimal valuation. The company is strategically shifting gears to strengthen its loan book.