A) Business Model of the Company
Type: NBFC (Non-Banking Financial Company)Founded: 1991 as Hero Honda FinLease Ltd, rebranded in 2015Parent: Hero MotoCorp Ltd
Primary Segments:
Retail Lending (65.08% of AUM): Two-wheeler loans, personal loans, mortgage loans.
MSME Lending (20.80% of AUM): Working capital, small business finance.
Corporate & Institutional Finance (CIF): Structured finance, large ticket lending.
Promoters:
Majority Stakeholder: Hero MotoCorp Ltd (41.15%)
Other Key Promoters:
Bahadur Chand Investments (20.23%)
Brijmohan Lal Om Parkash (9.51%)
Munjal family: Dr. Pawan Munjal, Renu Munjal, Renuka Munjal, Abhimanyu Munjal
Hero MotoCorp’s involvement ensures strong governance and brand trust, while the Munjal family’s continued control retains strategic continuity.
Operational Metrics
● Customer Base: 5 million retail, 29,060 MSMEs, 360 CIF borrowers.
● Sourcing Mix: Direct sourcing (31.97%), digital partners (22.39%), two-wheeler dealers (21.20%), DSAs (18.48%).
● Branch Distribution: 140 branches, with 86.43% in metro and urban centers.
● Collection Infrastructure: 545 call centre executives, 1,357 in-house collection team members, 8,313 field agents.
● Collection Method: Digital collections form 83.31% of total, showing strong digital integration.
B) How Hero FinCorp Makes Money
Hero FinCorp earns through interest income on loans and fees from services. Its income mix is primarily driven by:
Interest from loans (Retail, MSME, CIF)
Fees on processing, servicing, and penalties
Investment income (from surplus capital)
Loan Portfolio
Loan Type
FY24 AUM (₹ Cr)
FY23 AUM (₹ Cr)
FY22 AUM (₹ Cr)
Segment Contribution
Segment Secured Loans (%)
Total Loans
51,487.10
41,497.30
32,950.80
100%
59.95%
Vehicle Loans
12,794.30
10,838.40
9,876.00
24.85% of Total
100% (Retail)
Mortgage Loans
4,998.90
3,697.00
2,722.30
9.71% of Total
98.48% (Retail)
MSME Loans
10,779.80
8,481.50
6,151.40
20.80% of AUM
58.09%
CIF Loans
7,314.70
7,037.20
6,934.60
14.12% of AUM
94.15%
C) Industry Analysis – Michael Porter’s 5 Forces
Threat of New Entrants: Moderate – Due to regulatory compliance and need for capital.
Bargaining Power of Customers: High – Customers have multiple NBFC/bank options.
Bargaining Power of Suppliers: Medium – Mainly applies to capital providers.
Threat of Substitutes: Medium – Rise of fintech lenders and digital-only NBFCs.
Industry Rivalry: High – Competing with Bajaj Finance, Chola, Poonawalla, Sundaram, etc.
Additional Insights:
Market Size: The Indian retail & MSME lending market is projected to surpass ₹60 lakh crore by FY30.
Hero FinCorp’s Market Share: Estimated <1% of total NBFC loan book due to its focused product mix.
Top Competitors’ Share:
Bajaj Finance: ~7.5% of NBFC sector loan book.
Cholamandalam Finance: ~2.5%
Hero FinCorp: ~0.9%
D) Last 3 Years Returns in Unlisted Market
2022 Low: ₹780
2023: ~₹1,050
2024 Peak: ~₹2,200
Current (June 2025): ₹1,595
CAGR (approx.): ~24% over 3 years
E) IPO Expected Valuation & Peer Comparison
IPO Details:
Size: ₹3,668 Cr (Fresh Issue ₹2,100 Cr + OFS ₹1,568 Cr)
Valuation: ₹20,320 Cr (Unlisted Estimate)
Expected Valuation at IPO: ~₹17,836 Cr (for price band ₹1300–1400)
P/E: 184.82x (FY25 PAT ₹110 Cr)
Peer Benchmarking (FY25 Data):
Company
Revenue (₹ Cr)
PAT (₹ Cr)
ROE
D/E Ratio
Market Cap (₹ Cr)
P/E
P/B
Hero FinCorp Limited
9,903
110
1.91%
8.33
20,320
184.2
3.52
Bajaj Finance
69,684
16,638
19.2%
3.74
5,74,630
34.5
5.95
Chola Investment
25,846
4,263
19.7%
7.4
1,28,832
30.2
5.49
Poonawalla Fincorp
4,190
-98.3
-1.2%
3.19
36,383
Loss
4.44
Sundaram Finance
8,513
1,854
15.3%
4.63
57,418
31
4.37
F) Financial Performance (FY25 vs. FY24)
Metric (₹ Cr)
FY25
FY24
Change
Analysis
Interest Income
8,589
7,479
+15%
Loan book expansion.
Other Income
1,314
880
+49%
Fee income & recoveries.
Total Income
9,903
8,359
+18%
Healthy growth.
Interest Expenses
3,827
3,097
+24%
Rising borrowing costs.
Operating Expenses
2,935
2,513
+17%
Branch expansion.
Provisions
2,884
1,722
+67%
NPA coverage (Gross NPA: 5.05%).
PAT
110
637
-83%
Profit collapse due to provisions.
EPS (₹)
8.63
50.16
-82%
Severe dilution.
G) Key Industry Trends
Target Market: "Aspiring India" (₹2–10 lakh/year households), projected to grow from 103M (2022) to 181M (2030).
MSME Credit Gap: ₹103 trillion (as of March 2024).
Growth Drivers: Formalization of MSMEs, rising incomes, shift to digital lending.
H) Key Risks
Asset Quality: Gross NPA at 5.05%, Net NPA at 2.3% (FY25).
High Leverage: Debt-to-equity at 8.33x – well above peers.
Profitability Concerns: PAT dropped 83% YoY due to heavy provisioning.
Visit us at UnlistedZone
Disclaimer: This is not investment advice. Readers must do their own due diligence or consult a financial advisor before making any investment decisions.
A) Business Model of the Company
Type: NBFC (Non-Banking Financial Company)
Founded: 1991 as Hero Honda FinLease Ltd, rebranded in 2015
Parent: Hero MotoCorp Ltd
Primary Segments:
-
Retail Lending (65.08% of AUM): Two-wheeler loans, personal loans, mortgage loans.
-
MSME Lending (20.80% of AUM): Working capital, small business finance.
-
Corporate & Institutional Finance (CIF): Structured finance, large ticket lending.
Promoters:
Hero MotoCorp’s involvement ensures strong governance and brand trust, while the Munjal family’s continued control retains strategic continuity.
Operational Metrics
-
● Customer Base: 5 million retail, 29,060 MSMEs, 360 CIF borrowers.
-
● Sourcing Mix: Direct sourcing (31.97%), digital partners (22.39%), two-wheeler dealers (21.20%), DSAs (18.48%).
-
● Branch Distribution: 140 branches, with 86.43% in metro and urban centers.
-
● Collection Infrastructure: 545 call centre executives, 1,357 in-house collection team members, 8,313 field agents.
-
● Collection Method: Digital collections form 83.31% of total, showing strong digital integration.
B) How Hero FinCorp Makes Money
Hero FinCorp earns through interest income on loans and fees from services. Its income mix is primarily driven by:
-
Interest from loans (Retail, MSME, CIF)
-
Fees on processing, servicing, and penalties
-
Investment income (from surplus capital)
Loan Portfolio
| Loan Type |
FY24 AUM (₹ Cr) |
FY23 AUM (₹ Cr) |
FY22 AUM (₹ Cr) |
Segment Contribution |
Segment Secured Loans (%) |
r>
| Total Loans |
51,487.10 |
41,497.30 |
32,950.80 |
100% |
59.95% |
| Vehicle Loans |
12,794.30 |
10,838.40 |
9,876.00 |
24.85% of Total |
100% (Retail) |
| Mortgage Loans |
4,998.90 |
3,697.00 |
2,722.30 |
9.71% of Total |
98.48% (Retail) |
| MSME Loans |
10,779.80 |
8,481.50 |
6,151.40 |
20.80% of AUM |
58.09% |
| CIF Loans |
7,314.70 |
7,037.20 |
6,934.60 |
14.12% of AUM |
94.15% |
C) Industry Analysis – Michael Porter’s 5 Forces
-
Threat of New Entrants: Moderate – Due to regulatory compliance and need for capital.
-
Bargaining Power of Customers: High – Customers have multiple NBFC/bank options.
-
Bargaining Power of Suppliers: Medium – Mainly applies to capital providers.
-
Threat of Substitutes: Medium – Rise of fintech lenders and digital-only NBFCs.
-
Industry Rivalry: High – Competing with Bajaj Finance, Chola, Poonawalla, Sundaram, etc.
Additional Insights:
D) Last 3 Years Returns in Unlisted Market
E) IPO Expected Valuation & Peer Comparison
IPO Details:
-
Size: ₹3,668 Cr (Fresh Issue ₹2,100 Cr + OFS ₹1,568 Cr)
-
Valuation: ₹20,320 Cr (Unlisted Estimate)
-
Expected Valuation at IPO: ~₹17,836 Cr (for price band ₹1300–1400)
-
P/E: 184.82x (FY25 PAT ₹110 Cr)
Peer Benchmarking (FY25 Data):
| Company |
Revenue (₹ Cr) |
PAT (₹ Cr) |
ROE |
D/E Ratio |
Market Cap (₹ Cr) |
P/E |
P/B |
r>
| Hero FinCorp Limited |
9,903 |
110 |
1.91% |
8.33 |
20,320 |
184.2 |
3.52 |
| Bajaj Finance |
69,684 |
16,638 |
19.2% |
3.74 |
5,74,630 |
34.5 |
5.95 |
| Chola Investment |
25,846 |
4,263 |
19.7% |
7.4 |
1,28,832 |
30.2 |
5.49 |
| Poonawalla Fincorp |
4,190 |
-98.3 |
-1.2% |
3.19 |
36,383 |
Loss |
4.44 |
| Sundaram Finance |
8,513 |
1,854 |
15.3% |
4.63 |
57,418 |
31 |
4.37 |
F) Financial Performance (FY25 vs. FY24)
| Metric (₹ Cr) |
FY25 |
FY24 |
Change |
Analysis |
r>
| Interest Income |
8,589 |
7,479 |
+15% |
Loan book expansion. |
| Other Income |
1,314 |
880 |
+49% |
Fee income & recoveries. |
| Total Income |
9,903 |
8,359 |
+18% |
Healthy growth. |
| Interest Expenses |
3,827 |
3,097 |
+24% |
Rising borrowing costs. |
| Operating Expenses |
2,935 |
2,513 |
+17% |
Branch expansion. |
| Provisions |
2,884 |
1,722 |
+67% |
NPA coverage (Gross NPA: 5.05%). |
| PAT |
110 |
637 |
-83% |
Profit collapse due to provisions. |
| EPS (₹) |
8.63 |
50.16 |
-82% |
Severe dilution. |
G) Key Industry Trends
-
Target Market: "Aspiring India" (₹2–10 lakh/year households), projected to grow from 103M (2022) to 181M (2030).
-
MSME Credit Gap: ₹103 trillion (as of March 2024).
-
Growth Drivers: Formalization of MSMEs, rising incomes, shift to digital lending.
H) Key Risks
-
Asset Quality: Gross NPA at 5.05%, Net NPA at 2.3% (FY25).
-
High Leverage: Debt-to-equity at 8.33x – well above peers.
-
Profitability Concerns: PAT dropped 83% YoY due to heavy provisioning.
Visit us at UnlistedZone
Disclaimer: This is not investment advice. Readers must do their own due diligence or consult a financial advisor before making any investment decisions.
Disclaimer: This article is for informational purposes only and is not investment advice, nor an offer to buy or sell any security. Unlisted share prices are indicative. Please do your own research or consult a SEBI-registered advisor before investing.
