Travel tech firm OYO is back on the path to going public and has refiled its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi) under the confidential pre-filing route which was introduced in November, according to sources close to the company.
OYO’s new DRHP will give the company more leeway on the timing of the listing as well as on fine-tuning the issue size, based on market conditions, to around $400 million-$600 million, all of which will now be a primary issuance, to repay most of its debt, sources said. The company expects the issue timing to be around Diwali, pending Sebi approval.
Under the confidential route option, filing is available at the initial stage only to the market regulator. This was brought about by Sebi as part of bringing in progressive and globally popular practices. The confidential pre-filing option has been available and actively utilised in large global economies such as the US, the UK, Canada, etc. This route was first utilised by Tata Play in November 2022.
Under this route, the IPO can be floated within 18 months from the date of Sebi’s final comments. Companies also have the flexibility to change primary issue size by 50% till the updated DRHP stage. Under the traditional route, companies have to launch the IPO within 12 months from the Sebi’s approval.
OYO’s previous submission to Sebi in November 2022 was an updated financial report for the first half of the 2022-2023 financial year, which showed significant improvements in the company’s performance since its initial IPO application in September 2021. The updated report showed a bounce-back in topline, a sustained increase in gross margins, and an overall reduction in losses.
OYO reported its first positive adjusted Ebitda of Rs 63 crore, a 24% year-on-year increase in revenue, and a 69% increase in monthly booking value (GBV per month) for its hotels in H1FY23.
The company’s founder Ritesh Agarwal, in an employee townhall on Monday, said, that the company expects to clock adjusted Ebitda of nearly `800 crore in FY2024.
“We are taking measures to keep a healthy cash runaway and continuing to operate in a cost-effective way. We have a current cash balance of approx Rs 2,700 crore and we hope we will end up consuming very little of it for existing operations. Our cash flow has shown improvement and our reliance on external funds has gradually decreased overtime,” Agarwal added.
Sources said that OYO’s financial performance can be attributed to sustained growth in India, Indonesia, the US, and the UK, as well as relevant optimisation and synergies in its European vacation homes business.
Agarwal also shared during his townhall that OYO’s adjusted Ebitda for H2FY23 is expected to rise to approximately Rs 185 crore, marking the company’s first financial year of adjusted Ebitda profitability. Revenue for H2 is expected to be over Rs 2,800 crore, marking a year-on-year increase of approximately 15% versus H2FY22. For the full financial year 2023, OYO’s revenue is expected to be over Rs 5,700 crore, up approximately 19% from the Rs 4,780 crore achieved in FY22.
OYO had filed preliminary documents with Sebi in September 2021 for a Rs 8,430-crore IPO, including a fresh issue of equity shares aggregating up to Rs 7,000 crore and an offer for sale of Rs 1,430 crore. The company recently announced that it plans to double the number of premium hotels in India in 2023 by adding approximately 1,800 premium hotels. OYO’s focus on premium hotels started in the last quarter of 2022 when it added more than 400 new premium hotels between October and December. The company also launched an accelerator programme for first-generation hoteliers with more than five operational hotels on its platform.