Fitch Upgrades Oyo Rating Citing Positive Cash Flow
Fitch Ratings has revised the outlook of Oravel Stays’ – the parent company of India-based Oyo Hotels and Homes – to “positive” from “stable.” Fitch estimates that Oyo is on track to generate positive (EBITDA) — a measure of profit — and cash flow from operations. “The rating reflects its asset-light business model that benefits from minimal capex needs, largely exclusive distribution rights, pricing control over storefront inventory, fixed revenue share and strong long-term growth potential,” a statement from Fitch said. The ongoing demand recovery in the industry is expected to drive revenue growth of over 20 percent. Fitch expects the cost-reduction measures Oyo undertook in recent years to support its improving profitability. Meanwhile, Chinese hospitality company H World Grouphas sold 10 million equity shares, which translates to one-fifth of its holding of Oyo to United Arab Emirates-based family offices and institutional investors for around $9 million, a source told Skift. Earlier this month, rating agency Moody’s Investors Servicealso said it expected Oyo to generate between about $50 million and $55 millionin EBITDA this fiscal year.