Even though Oyo remains silent about the IPO, the long-awaited IPO seems to be happening.
Peden Doma Bhutia
India-based hospitality platform Oyo has finally reported positive earnings before interest, taxes, depreciation and amortization for the quarter ended June 30 as it prepares for an initial public offering (IPO) by the end of this year or early next year.
After reporting earnings before interest, taxes, depreciation and amortization of $1 million in the first quarter of fiscal 2023, Oyo intends to launch its IPO by either the end of this year or early next year, sources close to the company told Skift.
The hospitality platform’s strong presence in its core markets of India and South Asia has played a key role in its resurgence in the last quarter.
In its most recent filing with Indian regulator Securities and Exchange Board of India (SEBI), the budget hotel operator and aggregator reported that earnings before interest, taxes, depreciation and amortization margins rose to 0.5 percent in the first quarter of 2023 from minus 44 percent in fiscal year 2021 and minus 9.9 percent in fiscal year 2022.
After Oyo filed its IPO documents with Indian regulators in 2021, Oyo planned to raise $1.1 billion. However, reports earlier this year suggested that India’s heavily delayed IPO could be halved in value or even pulled.
Expressing concerns about Oyo’s prospects for profitability, Fitch Ratings also downgraded the rating of Oravel Stays, the parent company of India-based Oyo Hotels and Homes, from B to B- in June.
The company hopes to generate positive free cash flow by the end of this fiscal year, another source mentions. However, the company would need to continue revenue growth at the same or faster pace and maintain cost control.
The markets of India, Northern Europe, Indonesia and Malaysia are the key markets that need to function for Oyo to be free cash flow positive, the person added.
When filing the addendum to Red Hering’s draft prospectus on September 19 for its initial public offering (IPO), Oyo also mentioned an increase in total gross book value.
The biggest shift in financials appears to be monthly gross booking value per hotel, with growth of 47 percent in the first quarter of 2023 to $4,100 compared to $2,770 in 2022.
Gross monthly bookings per home in the vacation rental business also improved slightly to $490 in the first quarter of 2023.
Holiday homes have now become a strategic segment for the hospitality platform in Europe. The company made acquisitions, including acquiring Croatian vacation rental company Direct Booker. Last month, Oyo announced the acquisition of another holiday home in Denmark – Bornholmske Feriehuse, demonstrating its intention to further strengthen its position in Europe.
The Indian travel market, which is mainly dominated by domestic travel, has shown itself to be very resilient over the past few years and travel companies are hoping this will bode well for a successful IPO. India-based online travel company Yatra also plans to go public by the end of this year.