Post Covid travel boom helps OYO revive its IPO plans

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Post Covid travel boom helps OYO revive its IPO plans
  • The Gurugram-based company plans to raise ₹8,430 crore through an IPO.
  • OYO’s revised efforts to raise money from the public comes at a time when PE and VC investments have hit a 19-month low, as per IVCA and E&Y.
  • Its updated DRHP with narrowing losses indicates it is making a fresh approach to investors to analyse the company and its upcoming public issue.
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Global hospitality services platform OYO filed an addendum to its draft red herring prospectus submitted last year, to market regulator SEBI on September 19.

Formally known as Oravel Stays, OYO had filed its IPO documents last year. However, it stepped back from launching the public offer because of pandemic implications and erratic market conditions. Its updated DRHP with narrowing losses indicates that it is making a fresh approach to investors to analyse the company.

The Gurugram-based company plans to raise ₹8,430 crore via an IPO – that comprises a fresh issue of up to ₹7,000 crore and an offer for sale of ₹1,430 crore.

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OYO’s revised efforts to raise money from the public comes at a time when private equity and venture capital investments in India plummeted over 80% to $2.2 billion in August. The investments are at a 19-month low, according to the report by industry body IVCA and the consultancy firm EY.

OYO’s updated DRHP shows that its losses narrowed 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 (Apr-Jun) of FY23.

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This is because after two erratic years, travel is back in vogue. As a result, hotel operators are seeing a surge in occupancies as all forms of travel are back – be it vacations, weddings, conferences, exhibitions or business travel.
Particulars 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 operations in four regions -- India, Malaysia, Indonesia and Europe.

The hotel chain’s number of storefronts increased to 1.68 lakh as on March 31, 2022 from 1.57 lakh as at March 31, 2021 driven by growth in both their vacation homes and hotels business primarily as a result of the recovery in travel demand.

OYO’s gross book value increased by 22% to ₹8,100 crore in FY22 from ₹6,638 crore in FY21 due to the recovery in travel demand and easing of travel and domestic movement restrictions.

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

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