Skift Take

Even as Oyo continues to remain tight-lipped about the initial public offering, the long-awaited IPO looks to be on.

India-based hospitality platform Oyo has finally reported a positive earnings before interest, taxes, depreciation, and amortization quarter for the period ending June 30, as it prepares for an initial public offering ( IPO) launch by the end of this year or early next year.

Having reported a $1 million in earnings before interest, taxes, depreciation, and amortization in its fiscal 2023 first quarter, Oyo is looking to launch its initial public offering either by the end of this year or early next year, sources close to the company revealed to Skift.

The hospitality platform’s strong foothold in its core markets of India and South Asia have played a critical role in its resurgence over the last quarter.

In its latest filing with the Indian regulatory body — Securities and Exchange Board of India (SEBI) — the budget hotel operator and aggregator reported that the earnings before interest, taxes, depreciation, and amortization margins have risen to 0.5 percent in the first quarter of 2023 from a negative 44 percent in the financial year of 2021 and a negative 9.9 percent in the financial year of 2022.

Having filed a  filed its initial public offering paperwork with India regulators in 2021, Oyo planned to raise $1.1 billion. However, reports early this year suggested that the much-delayed initial public offering in India could be halved in value or even withdrawn.

Raising concerns over Oyo’s profitability prospects, Fitch Ratings had also downgraded the rating of Oravel Stays, the parent company of India-based Oyo Hotels and Homes, from B to B- in June.

The company is hopeful of generating positive free cash flow by the end of this fiscal, another source mentioned. However, the company would need to continue the revenue growth at the same or higher pace and maintain cost control.

India, Northern Europe, Indonesia and Malaysia markets would be the key markets that would need to perform for Oyo to accomplish positive free cash flow, the person added.

While filing the addendum to the draft red herring prospectus on September 19 for its initial public offering (IPO), Oyo has also mentioned an increase in the overall gross booking value.

The biggest shift in the financials appears to be in the monthly gross bookings value per hotel, with a 47 percent growth in the first quarter of 2023 to $4100 compared to $2770 for 2022.

The vacation homes business monthly gross bookings per home have also improved marginally to $490 in the first quarter of 2023.

Vacation homes have now emerged as a strategic segment for the hospitality platform in Europe. The company did tuck-in acquisitions including the acquisition of Croatian vacation rental company — Direct Booker. Last month, Oyo announced the acquisition of another Denmark based holiday home — Bornholmske Feriehuse indicating its intention to continue strengthening its position in Europe.

The Indian travel market, mainly dominated by domestic travel, has shown great resilience over the course of the last few years and travel cpmoanies hope this would bode well for a successful initial public offering. India-based online travel firm Yatra is also looking to go public by the end of this year.

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Tags: acquisitions, asia monthly, earnings, future of lodging, ipo, oyo rooms

Photo credit: Oyo's strong foothold in its core markets of India and South Asia have played a critical role in its resurgence over the last quarter. Oyo