IPO-Bound OYO Posts INR 175 Cr Adjusted EBITDA In Q1

IPO-bound Oravel Stays Ltd, the parent entity of hospitality chain OYO, told its employees in a town hall meeting on Monday (July 31) that it registered an adjusted EBITDA of about INR 175 Cr in the first quarter of the financial year 2023-2024 (FY24), sources told Inc42.

“Our Q1 adjusted EBITDA of around INR 175 Cr makes it an exciting start to the year. If you annualise this outcome, it sets us up for INR 700 Cr adjusted EBITDA this financial year, though, in all likelihood, we will achieve or probably surpass our previously stated target of INR 800 Cr,” OYO founder and CEO Ritesh Agarwal told the employees.

“The Q1 adjusted EBITDA of INR 175 Cr is nearly the same as what we achieved in Q4 last year, which is seasonally the strongest quarter,” Agarwal told the employees, as per the sources. 

It must be noted that in an addendum filed with the Securities and Exchange Board of India (SEBI), OYO had reported its first EBITDA positive quarter in Q1 FY23 at around INR 7 Cr.

Earlier this year, Agarwal told employees that the startup expected to mark its first full year of EBITDA profitability in FY23.

In the latest town hall meeting, Agarwal also informed employees that OYO added over 1,000 hotels and 3,500 homes to its platform in Q1 FY24.

“I am confident that we can deliver on our target for this year. Our cost rationalisation measures in Europe and busy summer month have positively impacted our EBITDA in the first quarter. This coupled with our increased focus on customer experience and quality improvement measures will drive our growth this year,” he added.

In April this year, Inc42 reported that OYO turned cash flow positive in Q4 FY23. The startup told its employees that it ended the March quarter with a surplus cash flow of about INR 90 Cr.

However, Agarwal made no fresh disclosure on cash flows in the latest town hall meeting.

Ahead of going public in a turbulent market, OYO has doubled down on its profitability goals in the past few quarters.

Credit rating agency Moody’s projected earlier this year that OYO would continue to remain EBIDTA positive in FY24.

Rating agency Fitch also revised its outlook on OYO’s long-term foreign- and local-currency issuer default ratings (IDRs) in May to ‘positive’ from ‘stable’, saying that the company was on track to generate positive EBITDA and cash flow in FY24.

In December last year, Inc42 exclusively reported about the SoftBank-backed hospitality unicorn laying off 600 employees.

OYO first filed the draft red herring prospectus (DRHP) for its initial public offering (IPO) in September 2021 and initially aimed to raise INR 8,430 Cr ($1.2 Bn). However, it later took the confidential route to pre-file its draft documents and cut the IPO size to $400-$600 Mn (INR 3,286 Cr-INR 4,929). 

However, as per a source, OYO is waiting for the market sentiment to recover adequately so that it can go ahead with the IPO plans.

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