SEBI Asks OYO To Share Updated DRHP; Likely To Delay IPO By 3 Months

Hospitality chain OYO is likely to delay its IPO (initial public offering) plans by another three months as the stock exchange regulatory body SEBI has asked the startup to update its draft red herring prospectus (DRHP).

This action was taken due to OYO not providing updated financial disclosures for the September quarter of FY23 in its DRHP filing with the SEBI.

According to the Inc42 sources, the regulatory body has also instructed OYO to share updated information about risk factors, key performance indicators (KPIs), outstanding litigations and valuations along with other material information. 

In a letter to OYO, SEBI stated, “The disclosures contained in present DRHP do not take into account the material changes/disclosures arising from updated financial statements as filed through addendums leading to revised period for disclosures which in turn leads to necessities to make material updates in risk factors, basis of offer price, outstanding litigations and update other relevant sections of DRHP.” 

The development comes almost a month after Inc42 reported OYO sacking 600 employees working in product and engineering departments. 

Notably, updating DRHP and sharing additional filings with SEBI will postpone OYO’s IPO plans by nearly three months or to the next quarter. A company insider said that the Ritesh Agarwal-led hospitality chain has welcomed the regulatory body’s move. 

“It would only be prudent to expect investors to put in money basis the latest information, and we have been needed to provide any latest disclosures at the appropriate pre-IPO stage. This is the most sensible course of action now. It may also shift the IPO plans by 2-3 months, but we will be able to show a full financial year of EBITDA profits in the process,” the source said. 

In October, OYO was valued at about $6.5 Bn after the Japanese investor SoftBank slashed its stake by 20% ($2.7 Bn) in the startup.  

In September last year, OYO shared an addendum to its DRHP with the stock regulatory body for its IPO. At the same time, it reported positive adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) of INR 7.26 Cr in April-June quarter of the financial year 2022-23 (FY23).

Meanwhile, in the second quarter of FY23, OYO posted an EBITDA of INR 56 Cr and revenue of INR 1,446 Cr. Its losses stood at INR 333 Cr in Q2 FY23 as compared to INR 414 Cr in the June quarter of FY23.

On the other hand, in the fiscal year 2021-22 (FY22), OYO’s revenue soared to INR 4,905.2 Cr against INR 4,157.3 Cr in FY21. Its losses after tax were slashed by 51% to INR 1,939.8 Cr in FY22, as compared to 3,944.8 Cr in the corresponding period last year.

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