OYO Rooms or OYO Hotels & Homes is an India-based multinational chain of hotels and homes founded in 2013 by Ritesh Agarwal. It began with being an online discount hotel booking site but has grown to accommodate other classes of hotels, vacation rentals, and co-working spaces in different countries. OYO has brought structure and technology hence changing the fragmented and legacy-based hospitality industry. oyo’s parent company, Oravel Stays has been instrumental in the growth and running of OYO as it started out as a subsidiary of the former.
OYO Rooms, which has been operational in the industry, has also gained investors’ attention. It is essential for investors willing to invest in OYO to have substantial knowledge about the OYO rooms share price, especially its unlisted share price as well as the OYO upcoming IPO.
According to the latest market information, the OYO share price on the unlisted stock market in India stands at ₹40. This valuation can be attributed to constant growth in revenues and decreasing losses, which demonstrates that the business is on the path to becoming financially sound.
Business Model
OYO’s business model centered around the idea of making budget hotels as standardized as possible to allow clients to receive high-quality services. The company secures contracts with budget hotels, restores them to OYO’s specifications, then incorporates them into its chain. OYO takes full control of the daily operations such as booking and customer relations on behalf of the hotel owners who get to enjoy high occupancy rates and high revenues in return. This model has been replicated for vacation rentals and extended to cover luxury hotels and co-working spaces, granting OYO access to a diverse clientele.
Milestone Achievement: First-Ever Profit
Oyo’s Parent company, Oravel Stays achieved its maiden profit in the second quarter of FY24. CEO Ritesh Agarwal announced this significant information to the senior leadership team, recognizing it as a unique event in celebration of OYO’s 10th anniversary. According to PTI, Agarwal stated that based on our current path, our first quarter of profitability will be in Q2 FY24, with an estimated profit after tax of more than Rs 16 crore. This key point signifies a major improvement in OYO’s financial condition, supported by a 25% rise in Gross Booking Value (GBV), reaching about Rs 10,000 crore.
The hotel division of the company had an impressive performance, adding Rs 6,172 crore to the GBV, with a 35% increase compared to the previous year. Moreover, there was a significant 82% increase in GBV per hotel storefront, reaching Rs 3,99,000 in FY23 compared to Rs 2,19,000 in the previous year.
Funding and valuation
OYO was recently in talks with a couple of potential investors for its fresh fundraising round. It is anticipated that this round is to come up with an estimated value of about $2.3 billion, a figure that marks a decline of more than 74% compared to $9 billion had been achieved during the funding round led by Microsoft in 2021.
The funding round is yet to be finalized in terms of its details. OYO plans to bag about $70-80 million from this new round of funding it is tapping. This fundraising is spearheaded by InCred Wealth. They have gathered a team of investors to back OYO’s financial strategy. The capital raised in this round aims to primarily refinance some of OYO’s existing debt commitments.
As of February, OYO’s financial reserves amounted to between $200-250 million, a testament to the company’s effective reduction in operational expenses. OYO had set out to raise $1.2 billion, equivalent to approximately Rs 8,430 crore, through its public offering. Later on, the company revised its plans by suggesting a smaller IPO filing, which was kept confidential and was 40-60% less than the initial amount.
SoftBank holds a significant 46% ownership in OYO, while CEO Ritesh Agarwal owns a 33% stake in the company. Their key investors include Lightspeed and Peak XV Partners. Notably, SoftBank was the promoter in OYO’s initial IPO draft.
Latest Developments
- Expansion Plans: OYO has aspirations of further expansion; it wants to capture more markets in regions it already operates in as well as penetrate into new regions. This span entails having made investment in technology to support the consumers’ experience and operations.
- Financial Performance: In the recent financial reports, OYO has presented better revenue and the company aims to become profitable soon. Reduced cost has been achieved by the company and it has also fine-tuned its operations to meet the current market conditions.
- Strategic Partnerships: OYO has entered into affiliations with different stakeholders in the hotel industry such as hotel proprietors, tour and travel companies among others with a view of creating the necessary coverage and enhancing the quality of services from the loyal clients.
- Regulatory Approvals: OYO has not outlined its international regulatory approvals for the IPO yet but is actively working to get it. The successful completion of this process will be a significant historical point of the company as it becomes a public company.
OYO Rooms Share Price has recently hit the headlines because of the non-execution of its IPO. This IPO was planned in 2021 and was highly anticipated by investors as it will be a listing for OYO. But the IPO has been set aside due to the market situation and certain regulations. This decision ultimately affected the OYO Pre IPO share price as well as the overall public perception of the company.
OYO Refinancing Plans
FY23: OYO goes on to achieve an adjusted EBITDA of Rs 277 crore thus making the operations of the business profitable.
Q4 FY23: Continued scale operational growth and strong working capital management enable It to achieve operationally breakeven in Q4 with surplus working capital available of Rs 90 crore.
Q2 FY24: A net profit posted for the first time at Rs. 16 crore marks the profitability for this freshly launched OYO.
Q3 FY24: The organization has reported that it earned Rs. 30 crore in profit.
FY24: Combinedly, as per adjusted metrics, EBITDA shown by OYO is around ~ Rs 888 Crores & the overall profit and loss accounts to Rs. 99 Crores.
Thus, the company aims to sell up to $450 million dollars in bonds in a bid to be in a position to fund its operations.
Oravel Stays Ltd, the parent firm of OYO has already paid ₹ 1620 Crore of debt in the form of buyback outstanding debt in November 2023 i.e. Q3 –FY24, for which it purchased 30% of its Term Loan B due in June 2026.
This makes the company have a lower outstanding loan balance and makes a contribution towards the improvement of the debt-to-equity ratio.
Refinancing brought the repayment period to 5 years compared to the current Term Loan B which is due in 2026.
Successful buyback, which will be useful for further cutting annual interest expenses at OYO for Rs 225 crore, which will have a beneficial effect on the company’s net income.
Current Plans and Future Outlook
On the projection, OYO wants to reattempt the IPO with a better financial position than ever. The company is expecting to launch its public offering by the end of 2024 primarily driven by its new found profitability and expansion into these appealing markets. The IPO is expected to provide a large amount of capital through additional operations, resulting in debt repayment and investment in higher technology.
Investment Insights & Opportunities
Investing in unlisted shares offers a unique opportunity to be part of a company’s growth journey before it goes public. Platforms like Planify provide a marketplace for these investments, allowing investors to explore options such as OYO unlisted shares that help investors to make informed investment decisions.
For those looking to delve deeper into the world of unlisted shares, Planify is an invaluable resource that offers a wealth of insights and investment opportunities. Investors can also visit planify application to gain more insights in opportunities like investing in Startups, Pre IPO, and unlisted shares.
Conclusion
The upcoming OYO IPO is set to be an important event for investors. With its strong market presence and ambitious growth plans, Oyo presents attractive investment opportunities.
OYO Upcoming IPO has a diverse portfolio, trades in over 80 countries, and contracts with over 157,000 hotels and homes This global presence underscores the importance of the initial public offering, which opened up opportunities for India and other tech startups considering entering the stock market. The OYO unlisted shares are currently trading at ₹35 – ₹40 per share in the Pre-IPO market.
However, investors must do their research well and consider market conditions, financial health and Oyo’s strategic plans before making investment decisions. By being informed of the latest developments and understanding the factors affecting OYO share price, investors can make informed decisions and can benefit from one of the most active developments in the hospitality industry.
Bravo 
Luke