Last year in October, Oyo parent company Oravel Stays Ltd filed a draft red herring prospectus (DRHP) with SEBI to launch an Rs 8,430-crore IPO
The prospectus was approved in January of this year, and the IPO is slated to start soon.
OYO submitted its DRHP with SEBI in October of last year and has now requested permission to file its financial accounts for FY22.
About OYO
OYO is an online marketplace for travelers to locate hotels and other places to stay. Ritesh Agarwal founded OYO in 2013 to aggregate and standardize services given by budget hotels and hostels across India. OYO Hotels and Homes manages India's largest hotel network.
About the IPO
The intial public offering includes a fresh issuance of shares worth Rs 7,000 crore and an offer-for-sale (OFS) by existing shareholders for Rs 1,430 crore. The business also stated that it will explore offering shares worth up to Rs 1,400 crore in a pre-IPO placement.
According to the sources, SoftBank, which owns 48% of OYO, will decrease its interest in the business, and its share sale would likely account for the majority of the OFS. A1 Holdings Inc (Grab) and China Lodging are two other investors that are expected to sell their IPO stakes.
The issue's global coordinators and book running lead managers are Kotak Mahindra Capital Company, JP Morgan India Private Ltd, Citigroup Global Markets India Private Ltd, ICICI Securities, Nomura Financial Advisory and Securities, and JM Financial Ltd.
OYO is aiming to cut the amount of its IPO from $1.2 billion to $800 million.
Negative market sentiment, pandemic challenges, and investor withdrawal have prompted the business to seek a lower valuation of $7 billion to $8 billion.
Objective
The offer consists of a new issue and an OFS totaling 84,300 million. The proceeds from the IPO will be utilized to reduce the company's debt and for other corporate reasons.
The fresh issue component of 70,000 million rupees would be used for repayment/prepayment of certain debt availed by their subsidiaries, 29,000 million rupees would be used for funding their organic and inorganic growth initiatives, and the remainder of the fresh issue would be used for general corporate purposes. The OFS is $14,300 million, with the proceeds going straight to the selling stockholders.
Strong Growth Momentum
OYO reported a 47% increase in monthly gross book value per hotel in Q1 FY23 compared to the previous fiscal quarter.
In Q1 FY23, OYO recorded revenue from operations of Rs 1,459.3 crore.
The company's Adjusted Gross Profit Margin has steadily increased from 33.2% in FY21 to 40.1% in FY22 and 41.3% in Q1 FY23.
Adjusted profits before interest, taxes, depreciation, and amortization (EBITDA) for the first quarter were 72.66 million Indian rupees (IPO).
Oyo recorded a loss of 18.9 billion rupees ($237 million) for the fiscal year ending March 2022, substantially lowering the previous year's loss of 33.83 billion rupees in 2021
The addendum filed by OYO shows that in the first quarter of FY23, i.e. April, May, and June, the company's sales increased and losses have come down. Gross booking value (GBV) was 24.87 billion rupees in the June quarter and 81 billion rupees in fiscal 2022, up 22% from the previous year.
OYO's revenue from operations in the first quarter stood at Rs 1,459.3 crore. The firm has registered a growth of 47% in gross booking value per hotel in Q1FY23. It stood at Rs 3.25 lakh, which was Rs 2.21 lakh in FY22.
Revenue from customer contracts grew 21% to 47.8 billion rupees for the fiscal year ending March 2022
OYO claimed that its general and administrative expenses have come down by 44.4% in FY22. In FY22, it became 515.4 crores, which was Rs 927 crores in FY21. Employee expenses also declined by 26.5% to Rs 1,117.2 crore from Rs 1,520.4 crore in FY21. Oyo said its 'storefronts' stood at 1.68 lakh at the end of Q1FY23, from around 1.57 lakh at the end of FY21.
Conclusion
Last year, the hotel-booking start-up Oravel Stays announced that it has sustained net losses every year since its inception and that its capacity to attain profitability may be delayed because of the economic consequences of the epidemic.
But now SEBI may consider the IPO document of OYO Hotels after the submission of financials for the second quarter. Considering this speed, OYO Hotels can launch its IPO by the fourth quarter of FY23. OYO submitted its DRHP with SEBI in October of last year and has now requested authorization to file the financial accounts for FY22.
Negative market sentiment, pandemic headwinds, and investor withdrawal have caused the business to seek a lower valuation of $7 billion to $8 billion. Book your IPO today!
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