Travel-tech unicorn Oravel Stays is looking to raise a small round of equity from private investors, including family offices, at a valuation of around $3-4 billion, which will be a decline of 60% from its last discussed valuation of $10 billion. With this, Oyo will join a list of unicorns, which includes Pharmeasy and Udaan, that has recently raised funds in a downround.
‘Oyo has also been approached by friendly investors and may do a small equity round at a $3-4 billion valuation, or at Rs 38-45 per share to further reduce its debt,’ its CEO Ritesh Agarwal told employees in a company townhall on Wednesday, according to sources. He also said that the company recorded a profit after tax of Rs 99.6 crore in FY24, and an adjusted earnings before interest, tax, depreciation and amortisation of Rs 888 crore, higher than Rs 274 crore in the year-ago period.
This marks Oyo’s maiden profitable year, after posting its first-ever net profit of Rs 16 crore in the second quarter. Oyo has been focusing on operational efficiency and cost optimisation in recent years, which included headcount reduction and scaling down operations in several countries. The company shut down over 5,000 hotels in FY23.
In the townhall, Agarwal also noted that Oyo’s operating costs have improved to 14% of gross booking value in FY24, from 19% a year ago, sources said. “This profitability was driven by improving operational performance, stable gross margins, cost efficiencies, and a reduction in interest costs following a part prepayment of $195 million in debt through a buyback process in the quarter-ended December during the previous financial year,” he said.
Agarwal expressed intentions of further such buybacks, if needed. Recently, the company withdrew its draft red herring prospectus with Sebi and said it will refile the IPO documents after refinancing its $450 million Term Loan B at a lower interest rate. The refinancing is likely to be conducted through the sale of dollar bonds, with an estimated interest rate of around 9-10%, as per media reports.