OYO Mulls Fundraising At Up To $4 Billion Valuation, Ritesh Agarwal Says

Private investors have approached travel tech platform OYO and it may raise equity at a valuation of up to $4 billion, Founder Ritesh Agarwal told employees in a townhall on Wednesday, sources said.

The IPO-bound firm, backed by Softbank, had its maiden net profitable year, posting a profit after tax of Rs 99.6 crore in the 2023-24 financial year.

It also reported an adjusted operating income or the earnings before interest, tax, depreciation and amortisation of Rs 888 crore for the full fiscal, up from Rs 274 crore in the year-ago period, sources said, citing a presentation shared in the townhall.

Oravel Stays Ltd, the operator of the travel-tech company OYO, will refile its initial public offering (IPO) documents with the Securities and Exchange Board of India (Sebi) after the refinancing of its $450 million Term Loan B (TLB) at a lower interest rate, PTI reported last week.

'OYO has also been approached by friendly investors and may do a small equity round at a $3-4 billion valuation, or at Rs 38-45 per share to further reduce its debt,' Agarwal informed employees in the townhall.

In the financial year-ended March 2024, OYO added about 5,000 hotels and 6,000 homes globally.

Gross booking value (GBV) per storefront per month for hotels stood around Rs 3.32 lakh.

The travel tech platform's gross margins improved in 2023-24, reaching Rs 2,508 crore up from Rs 2,350 crore in the year-ago fiscal.

Operating costs also improved, decreasing from 19% of GBV in FY23 to 14 per cent of GBV in FY24, sources said.

Agarwal shared, 'This profitability was driven by improving operational performance, stable gross margins, cost efficiencies, and a reduction in interest costs following a part prepayment of $195 million in debt through a buyback process in the quarter-ended December during the previous financial year.

'For FY25, we hope to grow our revenues and GBV as well, while continuing the profit growth trajectory.' OYO had recently concluded a debt buyback of USD 195 mn (Rs 1,620 crore). The buyback process involved the repurchase of 30 per cent of its outstanding Term Loan B due June 2026.

Agarwal said the company may consider further buybacks from the cash flow it is generating.

The refinancing will reduce interest rate from 14% to 10%, leading to annual savings of Rs 124-141 crore, and will extend the repayment date to 2029.