OYO Logs First-Ever Profit Of INR 229 Cr In FY24

Travel tech major OYO claims to have reported its maiden profitable fiscal for the financial year 2023-24 (FY24) on the back of an increased demand and improved market sentiment. 

According to the company’s annual report, the company’s profit after tax (PAT) for the fiscal stood at INR 229.57 Cr against the INR 1,286.51 Cr loss it made in the prior fiscal. However, its revenue from contracts with customers (revenue from operations) declined a marginal 1.3% to INR 5,388.78 Cr from the INR 5,463.94 Cr it made in FY23. 

It attributed the decline in its revenue to new additions to its inventory of hotels during the fiscal. OYO Hotel count grew to 18,103 at the end of FY24 from the 12,938 hotels it operated at the end of the fiscal year prior. Speaking on these new additions, the company said that the new hotels will take time to achieve full revenue potential.

In the fiscal, the Ritesh Agarwal-led startup managed to trim its expenses by 13.5% to INR 4,500.97 Cr from the INR 5,207.44 Cr it spent in the fiscal prior. 

The company’s EBITDA also improved to INR 887.81 Cr, nearly 2.5X from INR 256.5 Cr it raked in FY23. 

In a statement, the company attributed its improving financial health to its increased focus on improving the quality of its storefronts. It said that this focus was reflected in its offerings like Super OYO, a selection of the company’s top quality hotels as well as the launch of its premium hotels brand Palette.

“Over the last year, we have seen a surge in demand in the mid-premium and premium segments, and moving forward, we strive to offer greater choices across varied price points to guests who have rising aspirations,” it said.

In a bid to address this demand, the company was reported to be planning the launch of 25 new “high-quality, upscale properties” under the ‘SUNDAY’ brand in FY25. These hotels are planned to be installed in Gurugram, Manesar and Corbett.

Despite focusing on India for its business, the company’s annual report said that it has seen growth across Europe, the US, Southeast Asia and the Middle East. In line with its plans of global expansion, the company is looking to acquire Paris based premium rental homes company Checkmyguest group via the issuance of 7.92 Cr Series G CCPS. 

“OYO gets to acquire premium homes inventory primarily through a share swap over a period of time, in addition to some cash outgo for the acquisition, which gets quickly offset since it’s a cash generating business,” a company spokesperson said. 

Leading up to its financial disclosures for the prior year, the company saw its total valuation diminish from the erstwhile $10 Bn to $2.37 Bn. On August 12, it raised $175 Mn in the down round led by  Agarwal floated Singapore-based entity Patient Capital, along with J&A Partners and ASK Financial Holdings. 

Pertinent to note that the company has made attempts for a public listing twice by now. The company is now looking to refile the draft prospectus for its initial public offering soon before the focus has turned to OYO’s efforts to refinance debt ahead of the public listing. 

According to sources, the IPO is likely to be pushed back by six months to a year, as the company awaits the terms of the refinancing deal for the $660 Mn Term Loan B availed by founder and CEO Ritesh Agarwal to buy back shares from investors in 2019. 

In its financial disclosure, the company claimed that it managed to slash its interest outlay through the debt buyback of $195 Mn. “The buyback process involved the repurchase of 30% of OYO’s outstanding Term Loan B (TLB), due in June 2026. The company is also aiming to refinance its outstanding debt to a lower markup over the SOFR, to reduce the current effective interest rate from 14% to 10%, leading to annual savings of approximately $15-$17M and extending the repayment date to 2029,” it said.