By Joydeep Ghosh
After over a year of filing its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi), hospitality and travel tech firm OYO plans to file its second-quarter numbers by the end of November and seek a nod to go ahead with its initial public offering (IPO). Sources in the know told FE that the firm is currently in the process of finalising its Q2 (FY23) numbers, and the due diligence process is on. In September, the SoftBank-backed firm filed its first quarter numbers with the market regulator. Once the regular gives its approval, the issue could be launched by March-April 2023.
OYO, the firm led by 28-year-old Ritesh Agarwal, had filed the DRHP in October 2021 seeking to make a fresh issue of equity shares aggregating up to Rs 7,000 crore and an offer for sale of Rs 1,430 crore. However, the strong pipeline of IPO listings during the period and the failure of some big names in the startup space acted as spoilers. While Sebi was examining the DRHP, OYO approached the regulator for a special dispensation to defer its listing because of material changes that happened in the hospitality industry in the post-pandemic period.
“Last October, OYO’s numbers weren’t that strong due to the pandemic but have improved a lot now. So, it makes more sense to approach the market in the coming quarters,” the source said. In September, it filed its first quarter numbers with Sebi where it reported its first quarter (Q1 FY23) of positive Ebitda at Rs 10.57 crore. The revenues for the period were Rs 1,504.5 crore.
Its other numbers have also improved. For example, while the number of hotels is down, the average monthly gross booking value has improved. That is, in March 31, 2022, it had 17,994 hotels. By June end, it was brought down to 12, 668. This helped in improving the average monthly gross booking value per hotel from Rs 2.21 lakh for 2021-22 to Rs 3.25 lakh Q1 FY23 — a 47% growth. But for future growth, the number of storefronts (homes and hotels) has to increase. “While weeding out hotels that weren’t performing enough was a good strategy, going ahead, OYO will have to continue adding more storefronts (hotels and homes) for growth,” an industry player said.
The adjusted gross profit margins have risen to a healthy 40-41% range due to the removal of the minimum guarantee of 17% fixed income to storefronts (homes and hotels) to 0.1% now. So, the entire model is now based on revenue sharing.
In the past year, the stock market hasn’t taken kindly to listed startup companies. Many listed entities like Paytm and Nykaa are trading at nearly their all-time lows. Even valuations of many unlisted companies have taken a knock. OYO’s valuation has also been falling in the past couple of years. According to grey market sources, it is down from a peak of $9 billion to around $6.5 billion.