Oyo Still Keen on Long-Anticipated IPO in Early 2023

25.08.2023 - 14:43 / skift.com / Peden Doma Bhutia / Long

India-based budget hotel operator and aggegator Oyo updated its draft red herring prospectus with results for the first half of the fiscal year signalling its intent to soon launch its initial public offering.

Oyo looks to launch its initial public offering around the first quarter of 2023, which would be between April and June, said a source close to the company.

Setting in motion the Securities and Exchange Board of India’s approval to its initial public offering, Oyo updated its draft red herring prospectus with results for the first half of the financial year.

The hospitality platform had been permitted to submit updated financials before the regulatory body examined and finally processed the application.

Oyo’s adjusted earnings before interest, taxes, depreciation, and amortization for the second quarter grew eight times from $860,000 in the first quarter to $7 million primarily driven by a 23 percent quarter-on-quarter rise in gross booking value per hotel.

However, the sharp uptick in earnings before interest, taxes, depreciation, and amortization wasn’t enough to make the company profitable at a net level.

The company logged in a net loss of $40 million, even as losses narrowed from $50 million in the first quarter. The company’s addendum doesn’t disclose the quarterly comparison of the financials compared to the same period last year.  

In late September, SoftBank Group reportedly cut the valuation of Oyo by more than 20 percent, as a result of which Oyo’s valuation in the private market reportedly dipped to around $6.5 billion.

The company originally planned to raise around $1.16 billion through the initial public offering, seeking a valuation of around $12 billion.

Last month, India’s competition watchdog fined MakeMyTrip Group and Oyo for anti-competitive behavior. The Federation of Hotel & Restaurant Associations of India also said that it has written to the Indian regulatory body to stop Oyo from launching its initial public offering in the wake of a penalty.

Oyo mentioned in the addendum that the company this month filed an appeal against the $20 million fine, in the National Company Law Appellate Tribunal.

The demand has currently been stayed, subject to deposit of 10 percent of the total demand amount, which would come to around $2 million within six weeks from November 22.

Confirming that the company is well on its way to go public provided there are no fluctuations in market conditions, a source close to the company said the ongoing third quarter is crucial.

Having reported two consecutive earnings before interest, taxes, depreciation, and amortization-positive quarters, this quarter would help the market decide if this performance trajectory is sustainable.

One of the key reasons