IPO • Aug. 16, 2022

Oyo IPO to be launched soon?

OYO (OYO Oravel Stays) IPO Soon....

Hospitality & Travel tech. firms are looking to launch their Oyo IPO in September 2022 and have written to stock market regulator SEBI, seeking to update files & restarted the consolidation of financial information.  

Oyo Rooms filed a Draft Red Herring Prospectus (DRHP) for Rs. 8430 Cr. IPO in September 2021.

Oyo Pre IPO Shares are listed at Rs. 100. So if you want to gain the first mover’s advantage by investing in the firm to gain high dividends later, you can visit our website Planify.

The Company which had filed preliminary papers with SEBI settled for a lower valuation of around USD 7-8 Billion against the USD 11 Billion it was initially targeting. The company has still not got a green light from SEBI for its IPO.  The equity shares offered through the DRHP are proposed to be listed on the Stock Exchanges. The company has received approvals from BSE and NSE for the listing of the Equity Shares pursuant to letters. The Company proposes to make an IPO comprising of fresh issue of its equity shares of Re. 1 each and offer for sale by certain shareholders’ existing equity shares of Re 1 each at such premium arrived at by the book building process, as may be decided by the Company’s Board of Directors. According to reports, the company is going to file its addendum to its DRHP to disclose the financial results for 2022.

Covid restrictions disrupted the business model of Oyo. If not for the covid-induced lockdown and other restrictions, Oyo would have been among the most awaited IPOs.

Oyo’s move to launch IPO after the September quarter is mainly driven by the expectations of improvement in its financial performance and the current volatile nature of the market.

Financial Status of Oyo:

As per the company’s DRHP, Oyo had incurred a loss of Rs. 1744.7 Cr. in F.Y 21. The company’s proposed IPO comprised a Primary issue of Equity Shares aggregating Rs. 7000 cr. In August 2021, when Oyo raised USD 5 Mn from Microsoft, it was valued at USD 9.6 Bn.

Oyo’s revenue rose from 6,518.46 Cr. in F.Y 19 to 13,413.27 Cr. in F.Y 20 and then decreased to 4157.39 Cr. on the back of Covid 19.


The company's debt-to-equity ratio has grown. The business's related losses grew under retained earnings, affecting total equity, which fell 57% year on year in FY21. In FY21, the company's current ratio improved. The company's current liabilities were reduced by 10% year on year in FY, while trade payables and the current portion of the lease decreased 54% year on year and 76% year on year in FY21 respectively.

The operating ratios of the company are negative which is not good for the company, The COVID-19 pandemic has adversely impacted travel and tourism, as governments have implemented travel restrictions and people have become reluctant to travel. Financial results of the last quarter of FY20 and the whole of FY21 were materially and adversely affected by the COVID-19 pandemic. Although the company's ROE has improved, it remains negative. The company's equity has been reduced because, under retained earnings, the company's related loss has increased, affecting the company's total equity, which has decreased 57% in FY21.

Oyo Peer Comparison:

Oyo in comparison to its peers Country Club & Hospitalities Private Ltd. & Viceroy Hotels Ltd. has captured only a marginal market share. This itself shows that the company has a lot of untapped potentials to gain.

In fact that Oyo captures 63% Market share worldwide in the Small Room segment. So the company does have the potential to grow in the post-pandemic period.

For further information on Oyo’s peer comparison, you can visit the link given below for the Oyo Financial report compiled by our team at Planify.

Complete Report of Oyo Unlisted Shares.


SWOT Analysis of Oyo:

Strength:

  • They have built significant brand equity and awareness among its customers in a segment where the margins are very low which has helped the company in its growth and operations. The goodwill of the company has increased 150% in the last 3 years.

  • The company provides customer-centric practices and quality amenities at pocket-friendly prices.

  • The company has around 1,60,000 storefronts across more than 35 countries listed on the platform as of March 31, 2021. They have made a strategic decision to focus on these geographies as the Core Growth Markets. These markets account for more than 90% of the total stores globally as of March 31, 2021.

Weakness:

  • The company has expanded so fast, that it has approximately 1,60,000 rooms in an ineffective and inefficient manner and they are taking a massive loss on it, in terms of managing their existing contract.

  • The company is not maintaining a healthy relationship with Oyo Partners (The one who supplies hotels and rooms to Oyo).

Opportunity:

  • Rise in the number of business travelers, live-in couples are increasing in Tier-II cities. This is increasing business opportunities for premium rooms, OYO Townhouses, etc.

  • Growing demand for aggregators: As the world reels from recessionary trends, job losses and pay cuts, most high-end hotels are facing difficulties to balance supply and demand, which increases the scope for Oyo as most hotels would prefer to take external support to source new business.

Threat:

  • Limited online presence and distribution: Unorganized storefronts largely rely on offline distribution (word-of-mouth marketing). 

  • Lack of customer loyalty: In a market where customers are offered multiple choices, it is important to establish strong customer engagement.

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