How Does Hero MotoCorp’s Rs 700 Crore Investment In Hero FinCorp Translate For Investors?

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Hero MotoCorp is the 3rd largest bike manufacturer in the world and the largest bike manufacturer in India. Recently, Hero MotoCorp invested ₹700 crore in Hero FinCorp. According to the CEO of Hero FinCorp, Abhimanyu Munjal,  this investment will be the right step towards making sure that Hero FinCorp achieves $10 billion in assets by 2025 while catering to more than 15 million people worldwide.

Hero FinCorp is a non-banking finance company that has successfully raised ₹2000 crore at the beginning of the year. Out of this ₹2,000 crore, ₹700 crore was invested by Hero MotoCorp while Apollo, through its hybrid value fund, invested  ₹937 crore.

How Will This Investment Help Hero FinCorp?

There are several ways in which this investment can prove to be beneficial for Hero FinCorp, some of them are listed below:

1. It Will Boost Business Growth

The first and most important benefit of this investment is the business growth it will bring. As we mentioned earlier, the investment is supposed to allow Hero FinCorp to expand its business and achieve assets worth $10 billion while catering to 15 million customers worldwide by 2025. This is only possible if the company expands its business in new territories.

2. Improved Product Offering

As we discussed above, the main goal of Hero FinCorp is to expand and cover various sectors through the financial services it provides. While the company’s goal to reach 15 million customers by 2025 can only be achieved after the improvement in the product offering. Due to this, the investment can be very beneficial to them to increase product offerings in different parts of the countries.

3. Prepares For Initial Public Offering

There are rumours that Hero FinCorp might come out with an IPO in the later quarters of FY 2024-25. This investment will increase the company’s net worth and will again bring it under AA+ rating. After the funding by Hero MotoCorp and Apollo, the company’s net worth is estimated to be around ₹6782 crore. This will help Hero FinCorp to maintain its financials in a good light to prepare for a future IPO.

How Is The Investment Significant For Investors?

Hero FinCorp is not listed on any of the stock markets. The only way you can buy its shares is through the unlisted share market where they perform extremely well. The price of the share directly depends on market conditions and the company’s financials. This is why an investor needs to go through a company’s financial reports before investing. Let’s have a look at the company’s financials from the last few years.

Some of the most important metrics through which you can tell whether you should invest or not are revenue, PAT, EBITDA, net worth and a few other metrics. If we talk about the revenue of Hero FinCorp, their revenue went from ₹4979 crore in 2022 to ₹6447 crore in 2023. The EBITDA value of the company also increased from ₹1457 crore in 2022 to ₹2947 in 2023. The most significant bump can be seen in their PAT which went from ₹ -191 crore in 2022 to ₹480 crore in 2023, which is a huge step up from the previous year. As we mentioned above, with the new funding, the net worth of Hero FinCorp is estimated to be around ₹6782 crore. There is another metric which helps know a company’s worth, EPS or earnings per share. In the case of Hero FinCorp, their EPS went from ₹ -1.5 crore in 2022 to ₹3.7 crore in 2023.

Why Is It Important To Review These Metrics

When it comes to buying unlisted shares through the market, analysing the aforementioned metrics is very important because, in the unlisted share market, a company’s financial performance is the only thing that matters. In a sense, if a company’s financials go down so will its share prices and vice versa. So any investor needs to go through these metrics to have an idea as to how reliable a company is in the market.

Hero FinCorp unlisted share prices went from ₹700 in October 2022 to ₹1257 in September 2023. There are rumours that the company might come out with an IPO in 2024, so buying Hero FinCorp unlisted shares can be highly beneficial for investors as the enlisted share price might increase after the IPO, giving huge benefits in return.

If you have trouble finding any of the metrics mentioned above, feel free to visit a trusted trading platform like Stockify for all your needs. Stockify is a trusted and certified online platform that helps you buy unlisted shares through the market easily and safely. On top of that, experts at Stockify provide you with accurate and latest financial reports from the companies so that you can make the most of your investment.

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