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Post Covid travel boom helps OYO revive its IPO plans

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  • The Gurugram-based company plans to raise 8,430 crore through an IPO.
  • OYO’s revised efforts to raise funds from the public come at a time when investments in PE and VC have hit a 19-month low, according to IVCA and E&Y.
  • The updated DRHP with declining losses indicates that it is approaching investors in a new way to analyze the company and the upcoming public issuance.

The global hospitality services platform OYO submitted an addendum on September 19 to the draft prospectus on red herring submitted to market regulator SEBI last year.

OYO, formerly known as Oravel Stays, had filed its IPO documents last year. However, it has stepped back from launching the public offer due to pandemic implications and erratic market conditions. The updated DRHP with declining losses indicates that it is approaching investors in a new way to analyze the company.

The Gurugram-based company plans to raise 8,430 crore through an IPO, which consists of a new issue of up to ₹7,000 crore and an amount for sale of ₹1,430 crore.

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OYO’s revised efforts to raise funds from the public come at a time when private equity and venture capital investments in India fell more than 80% in August to $2.2 billion. According to the report from industry association IVCA and consulting firm EY, investment is at its lowest point in 19 months.

OYO’s updated DRHP shows that losses have declined by a significant 85% drop to 1,939 crore in FY22, from ₹13,123 crore in FY20. The company also turned EBITDA positive in the first quarter (April-June) of FY23.

This is because travel is back in fashion after two erratic years. As a result, hotel operators are seeing an increase in occupancy as all forms of travel are back – be it vacations, weddings, conferences, exhibitions or business trips.

Particularities Revenue Loss
FY22 ₹4.781 crore -₹1,939 crore
FY21 ₹3,961 crore -₹3.944 crore
FY20 ₹13,168 crore -₹13,123 crore

OYO has offices in four regions: India, Malaysia, Indonesia and Europe.

The number of storefronts of the hotel chain rose to 1.68 lakh on March 31, 2022 from 1.57 lakh on March 31, 2021, driven by growth in both their vacation homes and hotels, mainly due to the recovery in travel demand.

The gross book value of OYO increased 22% to ₹8,100 crore in FY22 from ₹6,638 crore in FY21 as a result of the recovery in travel demand and the easing of travel and domestic movement restrictions.

Going forward, the travel and tourism industry is projected to grow at a 6.6% CAGR from 2021 to 2030 to $1.9 trillion by 2030, the DRHP says.

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