Hospitality Giant OYO Rises 26% in Unlisted Market — Will the IPO Match Expectations?

In a remarkable turn of events, OYO's unlisted shares have surged by 26% in the past and last month, which resulted in reigniting the conversation around its long-awaited IPO. This rally, which has outpaced several listed hospitality peers, has been fueled by a mix of market buzz, improved financial performance, and sort of strategic tricks & strategic moves by the company. The question on everyone's mind is: will this momentum carry over to the public market, and can OYO's IPO truly match the high expectations or actually consolidate at a $7-8 billion valuation?

OYO Rallies Pre-IPO: Surge in Unlisted Value, But Can It Live Up to the Hype?

The sudden uptick in OYO's unlisted share price is no accident and rule based. It's a direct result of several key developments that have collectively bolstered investor confidence, sentiment and trust. 

Firstly, there's the imminent IPO buzz. News reports suggest OYO is preparing to refile its Draft Red Herring Prospectus (DRHP) in November, an announcement that immediately generated a flurry of buying activity in the unlisted market. After two previously shelved attempts, this third push is being seen as a sign of OYO's newfound maturity and stability. 

Secondly, the company's financial results have been a major catalyst. OYO reported its first-ever annual profit in FY24 and followed that with a doubling of its profit after tax (PAT) in Q1 FY26 was ~₹200 crore, more than double its profit in the same quarter a year earlier. This turnaround from a history of massive losses is a powerful signal to investors that the company's asset-light model is finally paying off.

Thirdly, OYO's strategic shift towards premiumization is gaining a lot of seemingly traction. The company is aggressively expanding its premium hotel brand, "Sunday," and recently launched a new vertical called "CheckIn" to focus on upscale properties.The move is seen as a way to increase revenue and improve profit margins, which has been historically low in the budget segment. 

Lastly, the announcement of a 1:1 bonus share issue with a record date of September 30, 2025, also triggered a surge in demand as investors sought to acquire shares before the cutoff date.

OYO rebrands as PRISM  signals Clarity, Scale, and Tech Focus

Alongside financial discipline, OYO’s parent company formerly Oravel Stays, now rebranded as PRISM is sharpening its corporate identity to better reflect its global portfolio spanning hotel brands, vacation homes, branded residencies and tech-powered partner tools. This rebrand under Prism underscores a strategy of clarity, diversity and long-term positioning. It strengthens partner loyalty and revenue optimization.

PRISM, which provides hotel owners with analytics on pricing, performance, and customer trends. This data-centric approach helps improve partner stickiness and revenue optimization, a crucial factor as OYO looks to strengthen or sustain margins and justify its IPO valuation ambitions.

OYO Valuation: Why OYO’s Unlisted Valuation towers over its Hospitality Peers? 

At current unlisted prices, OYO trades at forward multiples far higher than traditional hotel chains. Investors are essentially paying for scale, tech-driven efficiency, and asset-light growth — qualities that traditional hospitality chains cannot match.

According to unlisted market estimates, OYO is trading at P/E multiples in the ~150-160× range, significantly higher than listed hotel chains such as the phenomenal name includes Lemon Tree Hotels, whose P/E is ~50×. Investors paying the premium are betting on OYO’s scale, asset-light model, and margin expansion, though much depends on  a lot of continuous and sustained financial performance and clarity post-IPO.

Risks and concerns: However, this premium comes with risk. OYO’s margins, at around 6–7%, are still thin compared to global benchmarks. The history of its debt status and disputes with the hotel partners also raises questions. To give long -term value to IPOs, OYO will need to display that the profitability is durable in cycles, not just during travel upswings.

The strong recovery of the global tourism industry provides a strong tailwind for OYO's expansion plans, especially in terms of its international markets.

However, skeptics indicate to remain cautious. The high valuation comes with significant risks. OYO's ability to maintain its profitability and sustain its growth in a highly competitive market will be under intense scrutiny and consistent rapid investigation. The company also faces ongoing legal and regulatory challenges, including a fine from the Competition Commission of India and various service tax disputes. These issues can eat in future profits, with a heavy debt burden and cause financial vulnerability. In addition, the previous performance of the recent Indian tech IPO has been mixed, with some, like Paytm and Zomato, seeing significant corrections after their listing. 

Can the IPO Match Expectations?

Given the data, it is possible though not guaranteed that OYO could deliver a strong IPO. The recent unlisted share bump, improving profit trends, bonus issue move and board-level IPO preparation suggest OYO is improving its financial and governance posture. If it files in November as many reports expect, there will likely be strong institutional demand. 

However, for OYO to truly justify a $6-8 billion valuation (or higher), it will require to do more than post rising topline. It must maintain/improve margins, reduce debt or manage financing costs well, alongside other tasks and navigate regulatory risk, and show growth in diversified markets. Any misstep weaker than expected revenue growth, overspending, legal surprises could lead to valuation compression once the IPO opens.