Oyo Hotels Board to Weigh IPO Timing as Profitability Improves
Oyo Hotels is preparing for a crucial board meeting to determine the timing of its IPO. CEO Ritesh Agarwal will present plans for either a near-future launch or postponement until 2026. The company, valued at $4.5 billion privately, aims for an IPO valuation of Rs 5.5-7 billion. Oyo's financials show improvement, with EBITDA expected to grow 24% to Rs 1,100 crore in FY25. Three banks are managing the IPO process. SoftBank holds over 40% stake, while Agarwal owns 30%. Creditors may require $383 million debt repayment by October if the IPO doesn't occur, but might extend the timeline if Oyo lists this year.
*this image is generated using AI for illustrative purposes only.
Oyo Hotels, the hospitality technology company, is gearing up for a crucial board meeting that could determine the timing of its much-anticipated Initial Public Offering (IPO). CEO Ritesh Agarwal is set to present the company's IPO plans, with the board facing a decision between launching the offering in the near future or postponing it until 2026.
Valuation Expectations
The company, currently valued at approximately $4.5 billion in the private market, is eyeing an IPO valuation between Rs 5.5-7 billion. This potential increase reflects the company's growth and market position in the hospitality sector.
Improved Financial Performance
Oyo's financial health appears to be on an upward trajectory, with the company reporting significant improvements in profitability:
| Fiscal Year | EBITDA (in crore) | Growth |
|---|---|---|
| FY25 | 1,100.00 | 24% |
| FY24 | 889.00 | - |
The 24% year-over-year growth in EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) showcases the company's strengthening financial position.
IPO Preparations
As Oyo moves closer to a potential public listing, it has engaged the services of three investment banks to manage the book-running process. Two domestic banks and one international bank are taking the lead in this crucial role.
Ownership Structure
SoftBank remains the largest shareholder in Oyo, holding over 40% stake in the company. CEO Ritesh Agarwal follows with a substantial 30% ownership.
Debt Considerations
Reports suggest that Oyo's creditors, including Mizuho Financial Group, have set certain conditions regarding the company's outstanding debts. If the IPO doesn't materialize by October, Agarwal may be required to settle $383 million in dues. However, there's a possibility that lenders might consider extending the repayment timeline if Oyo lists on the stock exchange this year.
The upcoming board meeting will be pivotal in shaping Oyo's future as a public entity. As the hospitality industry continues to evolve post-pandemic, Oyo's decision on the IPO timing could have significant implications for both the company and potential investors.
19
