Oyo Rating Downgraded by Fitch Amid Profit Concerns

Fitch Ratings has downgraded the rating of Oravel Stays, the parent company of India-based Oyo Hotels and Homes, over profit uncertainty.

The ratings agency downgraded Oyo to B- from B.

Raising concerns over Oyo’s profitability prospects, Fitch said in a statement, “We believe that Oyo will likely achieve meaningful earnings before interest, taxes, depreciation, and amortization profit only in financial year 2024, relative to our previous expectations of financial year 2023.”

Owing to slow recovery in travel demand in Oyo's main markets, wage inflation and spending on marketing, Fitch expects a small deficit in Oyo’s earnings before interest, taxes, depreciation, and amortization in financial year 2023.

“As a standard process, rating agencies review credit ratings of Oyo as an issuer annually — mainly for the Term Loan B instrument currently outstanding. Fitch’s half a notch revision in our ratings, but with stable credit outlo