The hotel booking company filed new financial documents on Monday and is now targeting an initial public offering in early 2023 provided India’s stock market continues to rally and economic conditions improve, people familiar with the matter said. Oyo, formally known as Oravel Stays Ltd., is working internally toward an IPO in January as executives are encouraged by rising demand, they said, asking not to be named to discuss confidential plans.
Oyo had filed for a tentative listing in 2021, only to shelve the listing plan earlier this year after the prolonged pandemic hurt its growth and forced the company to cut thousands of jobs. It published its latest financial results in an addendum to its IPO filing on Monday, with the figures showing a narrower loss and an improvement in sales in the year to March 2022 and the following three months.
The startup currently focuses on four main regions: India, Malaysia, Indonesia and Europe, where it manages holiday homes. It has scaled back operations in markets it once considered crucial, such as the U.S. and China, where its employees are now making single digits, one of the people said.
Oyo and founder Ritesh Agarwal are trying to fend off a successful IPO after a series of setbacks in their efforts to transform the hotel and hospitality industry. SoftBank Group Corp. founder Masayoshi Son was an early and enthusiastic backer, and the Japanese conglomerate owns about 47% of the Gurgaon-based startup. The 28-year-old Agarwal owns about a third.
The revived listing plan also highlights how India’s stock market is bucking the trend of falling tech stocks globally. Accelerating inflation, lingering Covid-19 infections and the war in Ukraine have sent the tech-heavy Nasdaq down 27% this year. Meanwhile, India’s NSE Nifty 50 index is up 1%.
Oyo lost 18.9 billion rupees ($237 million) in the year to March 2022, almost halving from the previous 12 months. The figures were recalculated from previously undisclosed figures and included in an appendix to the IPO document made available by its bankers.
Annual loss before interest, taxes, depreciation and amortization narrowed to 4.8 billion rupees from 18.7 billion rupees. For the three months to June 2022, profit on that basis was 105.75 crore rupees, while the net loss was 3.5 billion rupees.
Revenue from contracts with customers for the financial year to March 2022 rose 21% to 47.8 billion rupees, as travel recovered as the pandemic eased. Revenues are still well below the 131.7 billion rupees booked for 2020, before the full impact of the coronavirus hit.
Oyo filed its preliminary document, the so-called Draft Red Herring Prospectus, or DRHP, for the $1.1 billion IPO in September last year, and 12 months have passed since then without the listing being approved. Earlier this year, it attempted to file additional documents and received regulatory approval for the move. The startup was recently valued at $9 billion, according to researcher CB Insights.
Oyo was founded in 2013 by Agarwal, then 19, who dropped out of college to travel the country. The start-up began working with small hotels to standardize everything from bed linen to bathroom shower fixtures, which it then branded with the bright red and white Oyo logo.
Backed by high-profile investors such as SoftBank and Lightspeed Venture Partners, it expanded furiously in Southeast Asia, China, Europe and the United States as it signed up hotel partners with guaranteed return deals. At one point, founder Agarwal was ambitiously aiming for the title of No. 1 in the world as a branded resort company.
During the pandemic, Agarwal was forced to rethink the startup’s business model. Oyo fired thousands of workers and stopped providing hotel sellers with guaranteed returns or capital to renovate their properties. He described the change as a transition to an “asset-light” model. Instead of offering minimum insurance, Oyo now supports hotel and resort partners with technical and product support, as well as customer service. Hoteliers can self-register and manage bookings and services in its app.
The new strategy helped the company become cash-flow positive in the quarter through June, and similar positive trends have continued in the current quarter, one of the people said.
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