SoftBank-backed OYO Intends To Reduce Its IPO by Two-third

According to media reports, SoftBank-backed hospitality and travel-tech company, OYO Hotels is reducing the shares it aims to sell via a stock-market debut by about two-thirds, citing the uncertain market environment.

The hospitality startup reported an adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) of Rs 63 crore in the first half of FY2023 in its regulatory filing with the Securities and Exchange Board of India (Sebi) in an update to its Draft Red Herring Prospectus (DRHP).

Sebi asked OYO to refile the draft IPO (Initial Public Offering) papers with necessary revisions in January. It submitted preliminary filings with Sebi for an IPO of Rs 8,430 crore in September 2021. 

The IPO was delayed due to the then-volatile market conditions, prompting the company to prepare for a lower valuation of around USD 7-8 billion rather than the USD 11 billion it had initially targeted. Furthermore,  Oyo announced 600 job cuts in its corporate and technology departments in December, last year.

OYO will outline plans to sell just a third of the new shares it originally planned, eroding the amount of fresh capital it is expected to receive, according to the filling.

According to OYO CEO Ritesh Agarwal, the firm estimates its revenue in FY23 to be more than Rs 5,700 crore, up 19 per cent from the Rs 4,780 crore it recorded in FY22. He added that OYO is aspiring to reach adjusted EBITDA of nearly Rs 800 crore in the next financial year. Moreover, the company claims that it will close FY23 with more than 1.72 lakh storefronts, as compared to 1.69 lakh in FY22, a growth of nearly 2 per cent.