IPO-Bound OYO Posts INR 313 Cr Loss In Q2 FY23

OYO Posts Second Consecutive Positive Quarter, Loss Falls To INR 313 Cr

SUMMARY

OYO files a second addendum as part of its draft red herring prospectus (DRHP) with market watchdog SEBI

OYO also reported a loss of INR 333 Cr during Q2 FY23, down nearly 20% from INR 414 Cr in Q1 FY23

This comes nearly a year after OYO received in-principle approval from SEBI for its INR 8,430 Cr IPO in January this year

IPO-bound hospitality major OYO has reported its second consecutive EBITDA-positive quarter, posting an adjusted EBITDA of INR 56 Cr in the second quarter of the financial year 2022-23 (FY23). This represents a growth of nearly 800% over the preceding quarter when its adjusted EBITDA stood at INR 7.26 Cr.

On a half-yearly basis, EBITDA improved from INR 277.9 Cr in H1 FY22 to INR 69 Cr in H1 FY23.

The disclosures were part of a second addendum filed by the traveltech major as part of its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI).

OYO also reported a loss of INR 333 Cr during Q2 FY23, down nearly 20% from INR 414 Cr in Q1 FY23. The traveltech major also trimmed its half-yearly losses by 22.2% to INR 747.1 Cr in the first half of FY23, compared to INR 959.8 Cr during the corresponding period last fiscal year.

In comparison, OYO posted losses of INR 1,939.8 Cr in the entirety of FY22 and INR 3,944.8 Cr in FY21.

Total income during the first six months of the current fiscal year rose to INR 2,956.7 Cr, up from INR 2,436.8 Cr during the same period last year.

Expenses during the first half of the current fiscal year rose nearly 9% to INR 3,630.1 Cr, compared to INR 3,333.1 Cr during H1 FY22. Employee benefits accounted for a big chunk of the expenses at around INR 898.9 Cr for the period under review.

The Gross Booking Value (GBV) shot up 33% year-on-year (YoY) to INR 5,028 Cr in the first half of FY23. The GBV per hotel per month surged 69% YoY to 3.48 Lakh in H1 FY23.

The number of storefronts at the end of Q2 FY23 stood at 168,711, including 79,961 home business storefronts. Hotel storefronts fell from 17,994 at the end of FY22 to 12,546 storefronts at the end of the first half of the current fiscal year.

The startup attributed this sharp fall to measures undertaken to improve its GBV per storefront per month, including temporarily pausing operations for storefronts that were operating at subpar levels or for ‘delivering an unsatisfactory customer experience.’

The positive numbers have largely been driven by the post-pandemic travel boom which has seen more people venture out and travel.

Meanwhile, sources close to the company told Inc42, “The ongoing third quarter will be the most important one to watch for OYO’s performance as it’s the peak season for travel in India and some of the other geographies OYO operates in. The company will need to show another quarter of growing EBITDA for the market to start judging if this performance trajectory is sustainable.“

This, the source added, would be the ‘most important parameter’ if the traveltech major decides to launch its IPO in the first quarter of 2023.

“The overall market will also need to be conducive towards growth stocks which seem to be out of favour currently,” added the source.

This comes nearly a year after OYO received in-principle approval from SEBI for its INR 8,430 Cr IPO in January this year. However, the market listing continues to be shrouded in uncertainty owing to the ongoing Russia-Ukraine geopolitical crisis, raging market volatility and negative investor sentiment.

OYO is not the only one that has deferred its plans for an IPO. Other players such as PharmEasy, MobiKwik, boAt, Snapdeal and Droom have also deferred their IPOs owing to the current market conditions.

The silver lining comes even as the hospitality giant has been bogged down by a slew of negative news. Earlier this year, tech investor SoftBank marked down the valuation of its stake in OYO by nearly 30%.

Additionally, the company has also been under regulatory scrutiny over an antitrust probe launched by the competition watchdog. In some respite earlier this week, the National Company Law Appellate Tribunal (NCLAT) effectively stayed an INR 168.88 Cr penalty imposed by the Competition Commission of India (CCI) over alleged unfair business practices.

But, as operating metrics improve, it remains to be seen how the investors respond to the numbers. Even as new age tech stocks continue to be in free fall, it remains to be seen whether OYO moves ahead with its market listing plans.