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About Hero Fincorp Limited
Hero FinCorp is a non-banking financial company (NBFC) in India and an associate company of Hero MotoCorp. The company provides a diversified range of financial products, primarily serving retail customers and micro, small, and medium enterprises (MSMEs). Its offerings include two-wheeler loans, personal loans, business loans, loans against property, and other financing solutions.
Founded in 1992 (originally as Hero Honda Finlease), the company was later restructured and renamed Hero FinCorp in 2011. Over the years, it has expanded from dealer financing to a broader lending platform catering to individuals and businesses across India.
As of March 2024, Hero FinCorp reported assets under management (AUM) of around ?51,821 crore, with retail loans contributing about 65% and MSME loans about 21% of the total portfolio. The company has also built a large customer base, serving more than 1.18 crore customers across the country.
The company has filed draft papers with SEBI to raise capital through an initial public offering (IPO), with the proceeds expected to strengthen its capital base and support future lending growth.
Why To Invest in Hero Fincorp Limited
According to the Draft Red Herring Prospectus (DRHP), the proceeds from the fresh issue are proposed to be primarily used for:
- Augmenting the company’s capital base to support future lending activities.
- Meeting regulatory capital requirements applicable to non-banking financial companies (NBFCs).
- General corporate purposes, in accordance with applicable regulations.
The company may also undertake an Offer for Sale (OFS) by certain existing shareholders, where the proceeds from the OFS will go to the selling shareholders and not to the company.
Strengths And Risks
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Diversified lending portfolio: across retail, MSME, and secured loan segments.
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Strong distribution network: including partnerships and dealer ecosystems across India.
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Association with the Hero Group: which provides brand recognition and industry presence.
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Technology-driven underwriting and risk management systems: supporting credit assessment and collections.
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Larger: Large customer base and growing assets under management (AUM).
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Competition: from banks, NBFCs, and fintech lenders in similar lending segments
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Exposure to credit risk: as the company’s business depends on borrowers’ ability to repay loans.
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Regulatory risks: since NBFCs operate under regulations set by the Reserve Bank of India (RBI).
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Economic and interest rate fluctuations: which may affect lending demand and asset quality.
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