Risks to OYO’s Business Model

1/ Regulatory Challenges:

Laws like Property listings, Taxation, and Franchise models can be a significant problem for the company.

2/ High Competition:

The hospitality industry is highly competitive, with OYO facing competition from both traditional hotel chains and digital platforms like Airbnb and Booking.com. To compete with its competitors, it will require continuous innovation and investment.

3/ Operational Consistency:

It remains a challenge to maintain service quality across hundreds of thousands of storefronts. OYO’s brand reputation could be harmed by any lapses in customer experience or operational efficiency.

4/ Dependence on D2C Channels: 

Customer preferences shift or new competitors emerge with more effective platforms can be a great challenge for the company.

Nonetheless, with a clear vision and strong foundation, OYO is well-positioned to capitalize on the vast opportunities in the global hospitality industry.

Oyo’s Financials

Oyo withdrew its draft IPO papers for the second time. The company initially filed for an IPO in 2021, aiming to raise approximately $1.16 billion with a valuation around $12 billion. However, in September 2022, SoftBank Group, Oyo’s largest investor, cut its estimated value for Oyo from $3.4 billion to $2.7 billion. Last year, Oyo announced a reduction in its IPO size to between $400 million and $600 million.

In an employee town hall in May, Agarwal confirmed that private investors have approached the company, and it may conduct a small equity round to further reduce its debt.

During the town hall, Agarwal had noted that Oyo had posted an adjusted EBITDA of $107 million for the fiscal year 2024, up from $33 million in fiscal 2023, marking its eighth consecutive EBITDA-positive quarter. Oyo also achieved its first net profitable year in the fiscal year 2024.

Product and Services

OYO Rooms operates the following brands for its properties and services:

• OYO Townhouse – It operates in the midscale hospitality segment.

• OYO Home - A Home management system that offers private homes in different locations that are fully managed by OYO.

• OYO Vacation Homes -a vacation home brand with vacation rental management brands Belvilla, Dan land, and others along with Germany-based Traum-Ferienwohnungen.

• Silver Key - hotel brand focused on corporate travellers 

• Capital O -It offers hotel booking services. 

• Palette – It is an upscale leisure resorts category. 

• OYO LIFE – It is targeted at long-term rentals. 

• YO! HELP - It is a self-help tool that offers support for check-ins, check-outs, and payments.

• OYO 360 – It  is a self-onboarding tool to list your property on OYO

Dividend

The Board of Directors has not recommended any dividend for the Financial Year 2023-24.

IPO Plans

As of now, there are a lot of discussions regarding raising funds through public, but Oyo shelves the IPO plans and opt for private funding.

1. OYO filed for an IPO in 2021 with the Securities and Exchange Board of India (SEBI), aiming to raise $1.2 billion at a $12 billion valuation.

2. The Company filed its Draft Red Herring Prospectus (DRHP) in September 2021 as it was planning for IPO.

3. The Company planned to get listed by 2022, but the COVID-19 pandemic at that time and other market conditions caused the company to delay its IPO plans.

4. It is expected that the company might aim for a valuation of around $10 billion to $12 billion in the coming time. The company’s IPO is expected soon.

Funding Details

• 2015: $25 million from investors, namely Lightspeed India, Sequoia, and others.

• 2015: OYO received $100 million in Series C funding from SoftBank.

• 2018: OYO got $800 million from SoftBank.

• 2019: OYO raised a total of $807 million from Ritesh Agarwal-led RA Hospitality Holdings and SoftBank in series F funding

• 2021: OYO’s latest funding came from Microsoft in July. The firm invested $5 million.

​​​​​​OYO (Oravel Stays) Unlisted Shares Subsidiaries

Oyo has over 100 subsidiaries, associates, and joint ventures. To name a few:

• OYO Hotels and Homes Private Limited (“OHHPL”)

• Belvilla AG (“BA”)

• Dancenter A/S (“DA”)

• Traum-Ferienwohnungen GmbH (“TFG”)

• Pt. OYO Rooms Indonesia (“PORI”)

• Oravel Stays Singapore Pte. Ltd. (“OYO Singapore”)

• OYO Hotels Singapore Pte Ltd (“OYOHSPL”)

• OYO Hospitality Netherlands B.V. (“OYO Netherlands”)

• OYO Technology and Hospitality (UK) Limited (“OTHUL”)

• OYO Hotels Inc. (“OHI”)

• OYO Hotel Management (Shanghai) Company Limited (“OHMSCL”)

• OYO Vacation Homes LLC (“OVHL”)

• Innov8 Inc. (“Innov8”)

• OYO Hospitality UK Limited (“OHUL”)

• OYO Rooms and Hospitality UK Limited (“ORHUL”)

• Admiral Strand Feriehuse ApS (“ASFA”)

• Belvilla Alquiler de Vacaciones Espaa S.L. (“BADVES”)

• Belvilla Deutschland GmbH (“BDG”)

• Belvilla Ferienwohnungen GmbH (“BFG”)

• Belvilla France SARL (“BFS”)

• Belvilla Croatia Ltd. (“BCL”)

• Belvilla Italia Srl (“BIS”)

• Belvilla Nederland BV (“BNB”)

• Belvilla Services BV (“BSB”)

• Dancenter EDB-Service ApS (“DESA”)

• Dancenter GmbH (“DG”)

• Guerrilla Infra Solutions Private Limited (“GISPL”)

• Loc Vacances S.à.r.l. (“LVS”)

• OYO Hospitality & Information Technology (Shenzhen) Company Limited (“OHITSCL”)

• OYO Hospitality Company W.L.L. (“OHCWLL”)

• OYO Hotels Canada Inc. (“OHCI”)

• OYO Hotels Switzerland GmbH (“OHSG”)

• Oyo Life Real Estate LLC (“OLREL”)

• OYO Mypreferred Hospitality UK Limited (“OMHUL”)

• OYO Mypreferred Hospitality II UK Limited (“OMHUL-II”)

• OYO Mypreferred Hospitality III UK Limited (“OMHUL-III”)

• OYO Mypreferred Hospitality USA Inc. (“OMHUA”)

• OYO Oravel Technology Company (“OOTC”)

• OYO Rooms Hospitality SDN BHD (“ORHSB”)

• OYO Technology & Hospitality (Vietnam) LLC (“OTHVLLC”)

• OYO Technology & Hospitality, SL (“OTHS”)

• OYO Technology and Hospitality (Thailand) Limited (“OTHTL”)

• OYO Technology and Hospitality FZ-LLC (“OTHF”)

• OYO Technology and Hospitality LLC (“OTHL”)

• OYO Technology and Hospitality Philippines Inc. (OTHPI)

• OYO Vacation Homes Rental L.L.C. (“OVHRL”)

• OYO Workspaces India Private Limited (“OWIPL”)

• Pt. OYO Hotels Indonesia (“POHI”)

• Residence de Monbrison A/S (“RDMA”)

• Saudi Hospitality Systems for Consultations and Research (“SHSCR”)

• Wolters Ferienhaus GmbH (“WFG”)

• Beijing Bei Ke You Jia Technology Company Limited (“BBYTCL”)

• Beijing Jiayoulewan Technology Company Limited (“BJTCL”)

• Dalian Qianyu Wanyu Trading Company Limited (“DQWTCL”)

• Mypreferred Transformation and Hospitality Private Limited (“MTHPL”)

• OC Investor 803 ECT Expressway, LLC (“OCI LLC”)

• Oravel Technology & Hospitality Lanka (Pvt) Limited (“OTHLPL”)

• OYO Hotels France S.A.R.L. (“OHFS”)

• OYO Hotels Germany GmbH (“OHGG”)

• OYO Hotels Ita

• lia S.R.L. (“OHIS”)

• OYO Hotels Netherlands B.V. (“OHNBV”)

• OYO Kitchen India Private Limited (“OKIPL”)

• OYO Rooms & Technology LLC (“ORTL”)

• OYO Vacation Homes Holding B.V. (“OVHHB”)

• OYO Vacation Homes UK Limited (“OVHUL”)

• OYO (Shanghai) Investment Company Limited (“OSICL”)

• OYO Hospitality Inc.

• OYO Technology and Hospitality (China) Pte Limited (“OTHCPL”)

Shareholding Pattern

Industry Overview

• Make in India, Digital India, and Startup India are the initiatives by the Government that have positively impacted the market.

  • In January 2022, the number of internet users increased to 658 million, fuelled by the Digital India campaign. 

  • Furthermore, as of January 2022, the country’s internet penetration rose to 47%, up from 45% in the previous year, and is expected to cross 65% by 2026.

  • Digitalization is enhancing the efficiency of operations, allowing for a swift booking to check-out process in mere minutes.

• Invest India forecasts that by 2030, India’s tourism sector will significantly bolster its GDP contribution, soaring from 13.14 lakh crores in FY21 to an impressive 20.85 lakh crores by FY30. This robust growth trajectory is set to ignite a dynamic expansion in the Indian hotel industry in the years ahead.

• After the COVID-19 pandemic, the economic recovery and growth led to an increase in the demand for hotel rooms, which rose from 25,000 rooms per day to 90,000 rooms per day.

• The shift towards a more balanced mix of services in the tourism sector has resulted in cost savings of customers and delivers a great experience to budget-conscious travellers. Consequently, those seeking luxury leisure experiences often opt for upscale hotel chains, typically bypassing bookings with licensed hotel platforms such as OYO, MakeMyTrip, yatra.com, and also Airbnb.

Performance Highlights

• As there is continuing improvement in business performance, which has seen the company achieve eight consecutive EBITDA positive quarters.

•  FY24 became a turnaround year for the company. The company turned PAT positive for the entire fiscal year, its first since inception, clocking a profit of INR 2,292 million.

• The company’s EBITDA increased by 316% from around INR 2,780 million in the FY23 to INR 8,772 million for the FY24. The company’s Adjusted Gross Profit margin remained strong at 23.6% in FY24 (23.2% in FY23) despite a substantial addition of new inventory.

• In FY24, Several hotels were added by the company. As a result, its inventory grew from 12,938 hotels on 31st March 2023 to 18,103 on 31st March 2024. 

• The new additions will require time to achieve full revenue potential, with financial returns expected to become evident going forward. Hence, the company’s consolidated revenue from operations remained stable at INR 53,887.89 million against INR 54,639.45 million during FY23.

• Recently, due to a surge in net income, the demand for OYO's unlisted share price has increased in the market. Investors closely track OYO share price India and the unlisted OYO share price as they anticipate its IPO plans.

• It maintains a gross profit margin of 46% and showed an 8% growth.

• The operating expenses dropped by 8% as the percentage of revenue stood at Rs. 1616 Crore.

•  There is a 40% hotel count growth in FY24 to drive revenue further in the future.

• Achieved first-ever PAT profitability with PAT of ₹229Cr in FY24, marking a significant milestone that strengthens the company’s financial foundation and accelerates its growth trajectory.

Conclusion

The reasons why OYO managed to stay on top of the hospitality sector include the ability to adapt and innovative methodologies. While the valuation of the company has seen ups and downs through the years, its revenue model and financial performance showcase enormous growth potential. Investors keen on the OYO share price today and the OYO share price NSE are waiting for the next steps in its IPO journey.