IPO-Bound OYO Hotels Reports A Smaller Loss In September Quarter

In an update to its initial public offering prospectus posted on Saturday, Softbank-backed Indian hotel aggregator Oyo Hotels and Homes Pvt Ltd reported a smaller loss for the July-September period compared to the prior quarter.

The Softbank-backed global travel technology startup OYO shared its financials with markets regulator SEBI as part of its pledge to amend its Draft Red Herring Prospectus with the financial performance through the first half of the financial 2022–2023.

The company's adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) for the second quarter increased eight times from Rs 7 crore in the first quarter to Rs 56 crore, mostly due to a 23 percent quarterly increase in the gross booking value per hotel to almost Rs 4 lakhs.

The gross booking value, or monthly revenue per hotel, increased 69 per cent year over year.

According to the company's prospectus, adjusted EBITDA refers to earnings that have been adjusted for, among other things, hotel renovations and asset depreciation.

The company was not net profitable despite the significant increase in EBIDTA. Although it has decreased from the Rs 414 crore reported in the first quarter of 2022–23, the company posted a net loss of Rs 333 crore.

In the first half of the year, the company's revenue increased by 24 per cent to Rs 2,905 crore. It did not provide a breakdown of quarterly sales.

Oyo Hotels had filed to go public in October 2021, but due to market conditions, it has delayed the share offering.

"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," a source close to the company told ANI.

"This will be the most important parameter if the company does decide 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.

The main thing to watch is whether investors will continue to value hospitality stocks at the strong levels the hospitality stocks are getting recently, or will it be bogged down by the stock price dips of other start-up stocks such as PayTM and Nykaa.